Yuan not cause of US economic woes, says Huo

(China Daily)
Updated: 2010-09-19 09:54
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Editor's note: The nation's currency policy was at the focus of discussions at the Congressional hearings in the United States this week. Some US lawmakers had called for tough measures against China for allegedly subsidizing its exporters by undervaluing the currency.

China Daily reporters Ding Qingfen and Gao Changxin spoke to Huo Jianguo, director of the Chinese Academy of International Trade and Economic Cooperation, a think-tank of the Ministry of Commerce to understand the reactions to the US moves, China's currency policy and Sino-US economic relations.

The United States has been pressurizing China to appreciate its currency and is blaming the currency policy for its trade deficit. Do you think such measures are reasonable?

Yuan not cause of US economic woes, says Huo

The actions and criticism against China makes no sense. The currency appreciation will not help solve the problems in the US. But what they (US) have done is also understandable.

The unemployment rate in the US is high and trade deficit is widening. With mid-term elections just round the corner, the Obama administration is under pressure to show the voters that they are tackling the problems in right earnest. China at this time naturally became the scapegoat, and hence we could say that the US has politicized China's currency policies.

The US moves do not hold any water and China must come out strongly against them.

China initiated its currency exchange reform in June this year. What are your views on the progress in the past three months and how do you see it going forward?

The reform allows flexibility of the currency and is a positive signal to other nations.

During the past three months, China's renminbi has gained by about 1.6 percent, which the US said is a small-scale floatation. It is why the US has been raising the issue. But the Chinese government has its own reasons and cannot allow the currency to appreciate further, given the economic slowdown in the second quarter and the transformation of economic development.

However, from a long-term perspective, the yuan will continue to appreciate against the dollar, stimulated by the fast economic growth.

The US has been blaming China's currency policy for its trade deficit. What are your suggestions for the Chinese government?

As I have explained before, the US has its own purpose in raising these issues. China should not worry about it too much. At the same time the direction of the currency policy is something that should concern China alone and not others. Nations like the US have no right to intervene or pin blame in these matters. The government should make its adjustments based on its own agenda.

What is the status of the economic ties between China and US?

China's economic growth has made immense contributions to the global economy especially after the financial crisis, and the US has also benefited . The Obama administration has pledged to double exports in five years and hence it will need to have strong ties with China. At the same time China's growth cannot be sustained without demand from the US. Both the nations need to strengthen cooperation and mutual understanding, and reduce trade friction.