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China calls on Washington to cool yuan pressure
(Agencies)
Updated: 2010-03-19 17:13
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China stepped up resistance Friday to US pressure over currency, calling on Washington to cool its "politicization and emotionalization" of the issue and warning a further rise in its yuan could drive exporters out of business.
Beijing is trying to head off pressure from US lawmakers for President Barack Obama to have China declared a currency manipulator in a Treasury Department report due out next month, which could set the stage for possible trade sanctions.
"A lot of problems can be properly solved so long as we can avoid politicization and emotionalization," a Commerce Ministry official, He Ning, told reporters. "It should not be one side pressing the other side."
He warned that dialogue with Washington over the issue might be harmed by "external disturbances" such as this week's letter from 130 American lawmakers calling on Obama to take action against Beijing.
Premier Wen Jiabao on Sunday rejected Washington's contention that the yuan is undervalued and other officials have dismissed complaints that exchange-rate controls are the cause of China's multibillion-dollar trade surplus.
Washington and other trading partners say China's controls give its exporters an unfair price advantage. Wen promised currency reforms but said the yuan will be kept at a "stable and balanced" level.
A senior trade official added a human dimension to Beijing's appeal in comments published Friday, warning that a rise in the yuan could wipe out profits for exporters, possibly leading to job losses.
Vice Commerce Minister Zhong Shan said the profit margin on many Chinese exports was less than 2 percent and a rise in China's yuan after 2005 forced many companies to close, The Wall Street Journal reported. It said Zhong made the comments in an interview Thursday ahead of a visit to the United States.
Zhong compared the precarious situation of Chinese exporters to water that is about to boil, the Journal said.
"Water doesn't boil if it is heated to 99 degree Celsius (210 degrees F). But it will boil if it is heated by one more degree," he said. Likewise, "a further rise in the yuan by a very small magnitude might cause fundamental changes" to exporters in China.
A Commerce Ministry spokesman said this week criticism over currency would not help efforts to end the global crisis.
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Analysts expect Beijing to allow the yuan to rise gradually later this year but say Chinese leaders might be reluctant to take action if they might be seen as giving in to US pressure.
China's central bank governor, Zhou Xiaochuan, said this month that the currency measures would be withdrawn "sooner or later" but said Beijing will act cautiously because the global outlook is still uncertain.
