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No further one-off revaluation as yuan hits record high
Latest Updated by 2006-03-29 10:37:08
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A central bank spokesman has reiterated China's currency, the yuan, will not have another one-off revaluation as U.S. Commerce Secretary Carlos Gutierrez is in Beijing for talks with Chinese officials on currency and other economic issues.

The yuan, also known as renminbi or RMB, strengthened Tuesday to 8.0212 against the U.S. dollar, its highest level over the past 12 years -- and since its July 21 revaluation. Accumulated rise has since reached more than 3 percent.

Quoted by Tuesday's Economic Daily, spokesman Li Chao for the People's Bank of China (PBoC), said the yuan will float on its ownon the back of demand and supply in foreign exchange markets and fluctuations of major international currencies,

Echoing the claim by Premier Wen Jiabao at a press conference at the annual session of China's top legislature earlier this month, Li said, "Renminbi boasts the room and capacity for floating up or down by itself in compliance with current mechanism and market changes."

Gutierrez has arrived in Beijing after ending a visit to the biggest city in southwest China, Chongqing.

His visit was on the heels of U.S. senators Charles Schumer, Lindsey Graham and Tom Coburn, who are leading an effort to force trade and currency "concessions" from China. They were reportedly discussing growing concerns in the U.S. Congress about China's trade practices, currency policy and intellectual property rights.

The visits come as the Senate nears a March 31 deadline for a vote on a bill written by Schumer and Graham that would impose a high tariff on Chinese goods to counter what they call artificial currency exchange rates that benefit Chinese manufacturers at the expense of American producers.

The pressure on China's currency issue built up as the country's trade surplus with the United States hit a new high in 2005. Statistics provided by China and the United States differ significantly. China said the total trade surplus with other countries came to 100 billion U.S. dollars last year, amid increasing trade disputes.

China's foreign currency reserves balloon as the country buys dollars and other foreign currencies that come into the economy and stockpiles them in U.S. Treasury bonds and other assets -- as a means of foreign exchange controls and to guard against possibleinflation, analysts say.

The China Business News reported Tuesday the nation's foreign currency reserves reached 853.7 billion U.S. dollars by the end of February, likely topping Japan's to become the world's largest.

Li, the PBoC spokesman, contended that the skewed trade with the United States was an outcome of a high savings rate in China as against an extremely low one in the United States.

Theoretically, excess savings produce trade surpluses, and vice-versa, savings shortfall means deficits, he acknowledged.

"In the Chinese economy, a high savings rate and large trade surpluses co-exist. The exchange rate is not only the sole solution that we should resort to resolve the trade imbalance problem."

He went on to say, "A key point is for China to take measures to lower the savings rate, bulk up domestic demand, especially consumption, to bring about economic growth. In the meantime, imports should be raised to improve the trade imbalance scenario."

China would typically boost the imports of advanced technologies, turn-key equipment and resources the country badly need -- in line with industrial policies and economic growth demand -- such as computer equipment and agro-products, as well as airplanes, Li said, citing other government sources.

"Equipment from developed countries are especially welcome."

President Hu Jintao is set to pay a state visit to the United States in mid or late April, a trip that a Foreign Ministry spokesman said is aimed at enhancing mutual trust and expanding common understanding.

Editor: Yan

By: Source: China View website
Previous:  Hu stresses safe production,"putting people first"  Next:China, Romania reach comprehensive consensus on further bilateral ties


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