Archive for the Yuan appreciation Category

China warns US over recession [Global Times]

Posted in China, China-bashing, China-US relations, Early 21st Century global capitalist financial crisis' US origins, Economic crisis & decline, Germany, Japan, Protectionist Trade War with China, US imperialism, USA, Yuan appreciation on November 28, 2011 by Zuo Shou / 左手

Nov. 22, 2011

by Zhu Shanshan

Vice Premier Wang Qishan addressed US concerns over bilateral trade on Monday, warning that an unbalanced recovery would be better than a balanced recession given the current gloomy world economy.

Speaking at the annual US-China Joint Commission on Commerce and Trade (JCCT) in Chengdu, Sichuan Province, Wang said that stable development between the two sides would bring positive contributions to the world, and that Beijing is ready to conduct closer and broader economic cooperation with Washington.

“One thing that we can be certain of, among all the uncertainties, is that the global recession caused by the international financial crisis will be chronic,” Wang said, adding that recovery will remain the primary task and that the two sides should form a solid partnership to face the challenges.

In response to mounting US pressure over yuan appreciation and other trade issues, the vice premier, who oversees China’s financial sector, urged Washington to relax controls on high-tech exports, avoid the abuse of trade remedies, recognize China’s market economy status and give equal treatment to Chinese companies that invest in the US.

Zhou Dunren, a deputy director of the Shanghai Pudong Institute for the US Economy, said Wang’s remarks were a warning to US officials that by imposing unreasonable duties on Chinese goods or forcing the yuan to appreciate, Washington might achieve its goal of reducing its trade deficit but in so doing harm both economies and the global recovery.

The vice premier’s statement came after US Commerce Secretary John Bryson, who co-chaired the JCCT with Wang, said Sunday that “many in the US, including the business community and Congress, are moving toward a more negative view” on the bilateral trading relationship.

Bryson also repeated US President Barack Obama’s “frustration” with China’s trade policy.

Washington has been accusing Beijing of deliberately keeping the yuan’s value low to gain a trade surplus, which harms employment in the US. However, China rejects such accusations and blames the US for setting up trade barriers.

According to the US Census Bureau, by the end of September, US trade in goods with China stood at a deficit of $217 billion, about $15 billion higher than the same period last year.

Meanwhile, analysts predict China’s economy is heading toward a soft landing due to a drop in exports and a tightened monetary policy to soak up liquidity. The government is also adopting measures to encourage domestic consumption.

China’s economic expansion has shown signs of a slowdown with GDP growth down to 9.1 percent in the third quarter from 9.5 percent and 9.7 percent in the first and second quarters respectively.

Zhao Zhongxiu, the dean of the School of International Trade and Economics under the University of International Business and Economics, noted that the world should not look to China as a savior because it cannot absorb all their exports.

“Chinese policymakers should strike a balance between growth and economic restructuring, given that we have already witnessed a slowdown in GDP growth. The restructuring should not come at the price of growth, and vice versa,” Zhao told the Global Times.

He noted that the high trade deficit has been a chronic structural problem for the US, and that Washington has made Japan and Germany scapegoats for the problem in the past.

Meanwhile, after the JCCT meeting, the two sides signed five economic and trade agreements related to intellectual property rights, technology, trade statistics, energy and business cooperation.

According to the agreements, foreign automakers are allowed to invest in the green vehicle market without transferring their technology to Chinese enterprises or establishing a local brand.

Bryson told reporters on Monday that China had confirmed that, in the coming five years, it plans to invest $1.7 trillion in “strategic sectors,” such as biotechnology, new-generation information technology, energy-saving and environmentally friendly technologies.

Bryson added that Wang said US and other firms would enjoy the same opportunities as Chinese firms to help these sectors grow.

“We had a very good dialogue on China’s strategic emerging industries, and we welcome China’s commitment that it will create a fair and level playing field for US companies in those industries,” Bryson said.

“Washington has complained that US companies were at a disadvantage while competing with indigenous companies in government procurement. By promising a level playing ground, Beijing is reassuring foreign businesses,” Zhou said.

He noted that if the US exports advanced technologies in these sectors to China, the trade imbalance between the two sides could be eased.

Yang Jingjie and agencies contributed to this story

Article link: http://www.globaltimes.cn/NEWS/tabid/99/ID/685110/China-warns-US-over-recession.aspx

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Commentary: Push for China currency bill based on an error [People’s Daily]

Posted in Bourgeois parliamentary democracy, Capitalism crisis early 21st century, China, China-bashing, China-US relations, Currency wars, Dalian, Early 21st Century global capitalist financial crisis' US origins, Economic crisis & decline, Economy, Obama, Premier Wen Jiabao, USA, Yuan appreciation on September 30, 2011 by Zuo Shou / 左手

By Xia Wenhui (Xinhua)

BEIJING, Sept. 16 (Xinhua) — U.S. Senate Democratic leader Harry Reid’s recent drive for a bill aimed at forcing up the Chinese currency erroneously links the yuan to his country’s depressed job market.

Reid may argue an undervalued yuan has cost many U.S. manufacturing jobs by giving China’s factories unfair advantages.

It’s easy for U.S. lawmakers to blame the huge U.S. trade deficit on China, which hit 273 billion U.S. dollars in 2010, when they search for reasons why more Americans cannot get jobs and are unhappy with the economic situation.

But Reid cannot deny the fact that the key reason for the current 9.1 percent unemployment rate is the lagging U.S. economy, which has no immediate link with the yuan.

Many analysts have agreed with this point. Phillip Swagel, a scholar with the American Enterprise Institute for Public Policy Research, has said a sharp appreciation of the yuan will only lead to an increase of 30 percent in U.S. commodities prices, adding more interest costs for government, enterprises and citizens.

A stronger yuan would not fundamentally change the structural problems that existed in the U.S. economy, such as unemployment and the trade deficit, said Swagel, who is also a former assistant secretary for economic policy at the U.S. Treasury Department.

Moreover, a mutually beneficial trade and economic relationship between the United States and China conforms to the common interests of the two countries.

As bilateral trade reached 285.65 billion dollars in the past eight months, Reid should agree that a stronger U.S.-China trade relationship in the past three decades has brought vast job opportunities for the two nations.

A sharp appreciation of the yuan will only deal a grave blow to China’s foreign trade and hurt its economy. And a volatile Chinese market will not help U.S. President Barack Obama’s ambition to dramatically boost U.S. exports to China.

Now with Obama asking the Congress to pass a jobs-creation package to cut tax and raise money, the White House is trying to boost growth and find more chances for trade and manufacturing.

For Beijing, a better economic relationship with the United States means smooth trade and strong support of the economy, especially when the world is on the edge of new economic turmoil.

Chinese Premier Wen Jiabao said Wednesday at the World Economic Forum Summer Davos meeting in northeast China’s port city of Dalian that China was willing to boost financial and economic cooperation with the United States and an open U.S. market and robust exports should be better options for both countries.

For the United States, lowering its barrier for investment and loosening its controls on exports to China would be more helpful than forcing the yuan’s revaluation.

Reid was no more than playing politics when he pushed the China currency bill in Congress, not the first time in recent years. The move will do no good for either the Chinese or the U.S. economies.

Article link: http://english.people.com.cn/90780/91344/7597979.html

Stronger yuan mainly due to US dollar depreciation [People’s Daily]

Posted in Capitalism crisis early 21st century, China, Currency wars, USA, Yuan appreciation on May 27, 2011 by Zuo Shou / 左手

May 10, 2011

The appreciation of the yuan, China’s currency, against the US dollar has mainly occurred because of a weaker dollar, experts said, warning that an influx of “hot money” could follow.

The value of China’s yuan hit a new high against the US dollar on Monday as the central bank fixed the central parity rate at 6.4988 yuan per US dollar, just ahead of the China-US Economic and Strategic Dialogue, which opened on Monday in Washington.

The symbolic 6.50 ratio was broken for the first time on April 29, when the central bank set its parity rate at 6.4990 yuan per US dollar. The yuan exchange rate has gained by almost 1.9 percent against the US dollar since the start of this year.

It has also risen by nearly 5 percent against the greenback since June 19 of last year, when the central bank pledged that it would make its exchange rate formation mechanism more flexible.

“The US dollar is weakening. That’s the main factor behind the accelerated appreciation of yuan,” said Su Guojian, research and managing director of China Construction Bank International, a Hong Kong subsidiary of the mainland’s China Construction Bank.

In late April, the US Federal Reserve decided to keep its low interest rate unchanged for an extended period. The reserve said it would continue its 600-billion-dollar bond-buying program through June.

The reserve’s decision has weakened the value of dollar, with the currency plunging to its lowest level since July 2008.

The greenback is losing its attraction and might fall into crisis if the Federal Reserve maintains its loose monetary policy, said Zhou Shihong, director of the China Finance Research Institute.

After pumping money into the global market, which has created inflationary pressure around the world and decreased the value of dollar, the US government is pressing the Chinese government for a stronger yuan.

US Treasury Secretary Timothy Geithner said last week that China is letting the yuan rise more rapidly to curb inflation, but needs to move even more swiftly toward a market-driven exchange rate.

China’s central bank said in a report last week that the government would keep the yuan exchange rate stable and would steadily make reforms to the yuan exchange rate formation system…

Source: Xinhua

Full article here: http://english.people.com.cn/90001/90778/90857/7375390.html

China Reaffirms Stand on Exchange Rate [Prensa Latina]

Posted in China, Employment, Yuan appreciation on March 4, 2011 by Zuo Shou / 左手

Beijing, Feb 28 (Prensa Latina)

China said on Sunday that it would promote a gradual, prudent reform of its currency exchange rate, a process which it sees as a national sovereignty issue, rejecting its politicization.

That position was explained again by Prime Minister Wen Jiabao in an online forum with Internet users prior to the start of the annual session of the National People’s Congress on March 5.

Wen also reiterated the principle that everything will be done in an independent, controlled way because a strong appreciation of the yuan would trigger the bankruptcy of many export businesses by pushing up the prices for their products.

This would lead to higher unemployment, mainly among migrant workers from rural areas, he said.

Wen said that the country would continue applying a market-governed regime of controlled floating exchange rates, not only linked to the dollar, but also to a foreign currency basket.

He said that the gradual advance of this reform and the relaxation of the exchange rate are needed for national development, but "we oppose a politicization of this issue", he insisted.

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Washington: Welcome News from China [Strategic Culture Foundation]

Posted in Australia, Beijing, China, China-US relations, Economic crisis & decline, Hu Jintao, IMF - International Monetary Fund, India, Malaysia, Obama, Russia, U.K., US imperialism, USA, Yuan appreciation on February 17, 2011 by Zuo Shou / 左手

Alexander Salitzki

01.28.2011

Chinese poet and historian Guo Moruo wrote in 1952: “German occupants demolished the monument to Victor Hugo in Paris in 1941. Recently, a model of the Ford plant was installed on the monument’s pedestal to demonstrate the dominance of the US dollar empire.  No less than the French people, we feel outraged as the act is an offense not only to the French culture, but to the culture of the entire humanity”.  The Chinese leader’s recent visit to the US highlighted the truth that currently the decline of the US financial empire may be much closer than widely believed.  Forecasts still have to be cautious considering that China’s current administration does not have to see things in the same light as Guo Moruo did in 1952, but at the moment the decline of the “US dollar empire” is in many regards an accomplished fact, and even if Beijing chooses to impede it, there are other players capable of setting the process in motion.  For example, the Saudi Arabia can refuse to sell oil for US dollars and Russia’s Gazprom – strike a deal with China to switch to the yuan in the gas business. The scenario is of course purely hypothetic[al].

The situation evokes curious historical analogies.  So, the establishment of the IMF at the concluding phase of World War II provoked discord within the Great Britain – US tandem.  In that epoch, the US was a young and vigorous economic giant with powerful industry and agriculture but a relatively modest international financial network.  London was the leader in international investments and banking but but already  lacked financial resources and was forced to borrow money from the US.  As a result, the US was awarded the contract to build the post-war financial architecture and to exercise control over the IMF (thus headquartered in Washington, not in London), and the British pound started shedding weight causing the holders of the British currency reserves a hammering headache. Another analogy that comes to mind is that in 2009 a retired Chinese official coined the term “China’s Marshall plan for Africa”.  The plan’s stated total was set at half a trillion dollars, just slightly below that of B. Obama’s recent infusion into the embattled US financial system, but in the former case the plan encompasses serious projects meant to boost the development of African countries (including B. Obama’s ancestral Kenya) and in the latter we simply witness Wall Street’s progressing inability to convert the slimming US currency into profit-bearing capitals.

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US to ‘intensely focus’ on RMB: Obama official [People’s Daily]

Posted in China, Obama, USA, Yuan appreciation on February 14, 2011 by Zuo Shou / 左手

February 11, 2011

The Obama administration will remain "intensely focused" on China’s yuan or RMB exchange rates, though the US Treasury Department decided last week not to name China a currency manipulator, according to wired reports.

"We’ve made progress on the currency issue but that does not mean we are satisfied," said Lael Brainard, the US Treasury Department’s Undersecretary for International Affairs.

The Treasury last week in a long-delayed report declined to say that China manipulates its currency for trade advantage, citing a 3.7 percent rise in the yuan against the dollar since June, and an even bigger change in the "real bilateral exchange rate", after taking into calculation of higher inflation rates in China.

"We will remain intensely focused on the issue to ensure accelerated progress to address the remaining substantial undervaluation of the RMB," Brainard said, referring to the yuan’s other name.

The Obama administration is maintaining continuous interactions with all levels of the Chinese government and will be focused on ensuring that China lives up to its commitments, "using all appropriate tools and leverage to make sure this happens."

Asked about new efforts in the US Congress to pass China currency legislation, Brainard said the lawmakers had the same goals as the administration, pressuring China to quicken pace of yuan appreciation and making US-made goods more competitive on the marketplace.

However, she said that the administration has "different means and mechanisms than Congress to pursue the goals" and have been making substantial progress.

By People’s Daily Online / Agencies

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China defends yuan policy and U.S. mulls new moves [People’s Daily]

Posted in China, China-US relations, Currency wars, USA, Yuan appreciation on February 13, 2011 by Zuo Shou / 左手

February 11, 2011

China defended its foreign exchange rate policy Thursday, one day after US Federal Reserve Chairman Ben Bernanke urged Beijing to let the value of its yuan currency rise.

Foreign ministry Spokesman Ma Zhaoxu said at a regular news briefing that Beijing’s controls on the yuan were in the country’s "long-term interest," while pledging the government would continue to push forward reform of the currency regime.

The comment followed Bernanke’s rare criticism of another country’s financial policies.  He called this week’s interest rate hike by China’s central bank – aimed at fighting high inflation – a "surprising" way to curb prices.

Bernanke instead urged Beijing to allow a rise in the value of the yuan.

"The renminbi is undervalued," Bernanke told a hearing of the House of Representatives budget committee.

"It would be both in our interest and in the Chinese interest for them to raise the value of their currency.  And it would help them with their inflation problem," he said.

Ma did not mention Bernanke in the briefing but his comments appeared aimed at the US Fed chief’s remarks.

"Facts have proven that the renminbi exchange rate is not the major cause of the trade imbalance between China and the United States," Ma said.

The US has raised the pressure on China to float its currency to help address the yawning US trade deficit with what is now the world’s second largest economy.

In a report to Congress Friday, the US Treasury officially cleared Beijing of the currency manipulation charge, but added that progress toward allowing the yuan to appreciate was "insufficient."

The Treasury report acknowledged the yuan had appreciated 3.7 percent against the dollar between June 2010 and January 2011.  On an inflation-adjusted basis, the appreciation was higher, Treasury said, rising at an annual rate of more than 10 percent.

A group of lawmakers Thursday were expected to begin a new drive on a bill which failed last year that would punish China for keeping the yuan low, branding it a subsidy for Chinese exports.

Their bill, which could lead to countervailing duties on Chinese exports, revives one that cleared the House of Representatives by a 348-79 margin in September but stalled in the Senate.

Source: Global Times/Agencies j

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