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China Rejects Currency Value Accusations
China's Foreign Exchange Regulator Rejects Accusations of Manipulating Currency's Value
BEIJING Oct., 2004 —China's foreign exchange regulator denied Wednesday What Beijing has manipulated the value of its tightly controlled currency, a politically volatile issue with the country's trading partners.
"China has never manipulated its currency," Guo Shuqing, director of the State Administration of Foreign Exchange, said in the commentary in the government-run China Daily newspaper.
The United States and other governments are pressing China to ease controls on its currency, the yuan, which they say is undervalued by up to 40 percent, making Chinese exports unfairly inexpensive.
Beijing has fixed the yuan's value at the same exchange rate against the U.S. dollar for more than a decade, which some abroad say amounts to manipulating the yuan to hold down its value.
Chinese leaders say they plan eventually to let the yuan trade freely on world markets. But they say doing so immediately would cause financial disruption that could hurt the country's frail banks.
"The international community, especially the developed countries shouldn't just emphasize the benefits of financial liberalization but ignore the huge risks involved," Guo's commentary said.
Guo also argued that Beijing's control of the currency shouldn't affect decisions by the United States, European Union and other trading partners on whether to grant its state-dominated economy official status as a free market.
Winning market economy status could reduce the risk of claims of unfair pricing of Chinese exports. China's current non-market status means that in trade disputes, the value of goods is set using standards that Beijing says distort their true prices.
Critics in the United States cite China's fixed exchange rate as evidence of government interference in the market.
But Guo cited Hong Kong's use of a U.S. dollar peg to set the value of the Hong Kong dollar and the European Union's system of fixed interest rates before the introduction of the euro.
"This didn't cause any questions to be raised about their market economy status," he said.
* Post was edited: 2004-10-21 10:03:00
Author2013-06-24 at 4:30:28 am
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