US to keep pressure on yuan at APEC
Updated: 2011-11-10 07:54
By Zhang Yuwei (China Daily)
HONOLULU - China's currency will continue to be a topic during the Asia Pacific Economic Cooperation (APEC) forum in Hawaii later this week.
Experts say that the United States is likely to keep pressing China to appreciate its currency - a move supported by many US lawmakers.
The US has been criticizing China's "undervalued currency", claiming it is a way China keeps its exports cheap in overseas markets.
But the yuan has appreciated 7 percent against the US dollar since June last year and 30 percent since 2005, while the US trade deficit is still rising.
Export-focused APEC economies, led by China, need to allow their currencies to respond to market forces and look for other opportunities of growth that are not purely focused on exports, US Treasury Assistant Secretary Charles Collyns said on Monday.
The G20 leaders last week in Cannes committed to moving "more rapidly toward market-determined exchange rate systems and enhance exchange rate flexibility to reflect underlying fundamentals".
However, there was some debate over whether more flexibility necessarily equated currency appreciation. Commerce Minister Chen Deming said on the sidelines of the G20 summit that recent selling pressure on the yuan indicated a change in market perceptions.
Last month, the US postponed a report on the exchange-rate policies of its trading partners - including China - until after the G20 summit and APEC forum.
Last month, the Senate passed a bill, by 63 to 35, urging China's currency to rise, which would let US companies seek duties to compensate for "misaligned" currencies. US lawmakers who are supporting the bill said China, with its "undervalued currency", has contributed to the loss of manufacturing jobs in the US.
House Speaker John Boehner, however, said he had "grave concerns" over the bill because it might start a "trade war" between the world's two biggest economies.
The measure was condemned by Beijing, warning it shows trade protectionism, which hurts both economies. Foreign Ministry spokesman Ma Zhaoxu described the bill as "protectionism and a serious violation of World Trade Organization rules".
"The legislation in the US Congress blaming Chinese currency practice for the loss of jobs in the US is nonsensical and absurd," said David Riedel, president of Riedel Research Group, which provides independent equity research focusing on emerging markets.
Other experts said the bill will only prompt manufacturers to relocate production bases to countries with lower labor costs, such as Vietnam, rather than move jobs back to the US.
"What it (the bill) will do is cause more inflation to America as manufacturers have to raise prices or will cause more job creation in Vietnam and other lower-cost producing countries," said Shaun Rein, author of the soon-to-be published book The End of Cheap China.
The APEC meetings in Honolulu, hosted by US President Barack Obama and Treasury Secretary Timothy Geithner, started on Wednesday. President Hu Jintao and Obama will meet on the sidelines of the forum.
Agencies contributed to this story.