The Chinese media and economic researchers have reiterated
Beijing's determination to defend a stable yuan on the eve of US
Treasury Secretary John Snow's China visit to press for a
revaluation of the Chinese currency.
Keeping the renminbi exchange rate basically stable is not only
conducive to the sustainable and stable development of the Chinese
economy and finance but also benefits global economic development,
the official Xinhua News Agency says in a commentary yesterday,
adding that allowing the yuan to appreciate at present will do more
harm than good to the Chinese economy.
So "maintaining the stability of the yuan is a long-term
principle that should be upheld in China..." the commentary
says.
Meanwhile, an editorial in Guangzhou-based 21st Century
Business Herald -- a leading economic newspaper -- also
strongly warns against the potential harm of raising the value of
the yuan.
"If China caves in to international pressure to allow the yuan
to appreciate, it will create a bad precedent to undermine China's
independent economic policy," the newspaper says in its Monday
edition.
The comments were apparently aimed at defusing new pressure for
the yuan's appreciation expected from Snow, who arrives today in
Beijing for a two-day visit.
Amid increasing criticism that an undervalued Chinese currency
is giving the country's exports an unfair price advantage, Snow is
set to focus on Beijing's currency policy during his meeting with
Zhou Xiaochuan, China's central banker.
Snow and the White House have been under mounting pressure from
some American legislators and manufacturers, who blame soaring
unemployment and corporate bankruptcy in the United States for a
relatively inexpensive yuan.
The American Manufacturers Association has urged the Bush
administration to step up its pressure on China to move to a market
system for fixing the yuan's exchange rate -- China has been
implementing a managed float system to keep the yuan at about 8.28
to the greenback.
The Xinhua commentary, however, doubts the wisdom of picking the
current Chinese exchange-rate policy as a scapegoat for economic
problems of countries such as the United States and Japan.
It notes that China's trade with other countries is reciprocal
and mutually beneficial and the Chinese economy and other economies
are complementary.
Given the fact that the sluggish economic growth in some
countries is a result of their own structural problems, the
commentary says, the yuan revaluation is not a panacea at all.
"On the contrary, allowing the yuan to appreciate will undermine
the purchasing power of consumers in countries that import Chinese
products and cause economic losses to foreign enterprises who have
invested in China by pushing up their costs and the blunting
competitive edge of their products," it says.
In the face of the US demand for a yuan revaluation, economic
researchers called for "negotiation intelligence and skills" to
defend the national interests while urging for positive measures to
help ease pressure for a stronger yuan.
Zhao Jingxia, a researcher with the University of International
Business and Economics, said the support from some American
multinationals and prestigious economists for a stable yuan may be
used as the best bargaining chip for China.
Stephen Roach, chief economist at the US investment bank giant
-- Morgan Stanley -- said in early July that it "would be a serious
mistake" to put pressure on China to revalue its currency.
China's increasing imports from other countries, especially
Japan and the United States, may also be cited to justify the
country's firm stand in defending the stability of yuan, according
to Zhao.
In the first seven months of this year, China's imports jumped
by 43 percent year on year, compared with 33 percent for exports;
and imports from Japan alone totaled 566 billion yen (US$4.8
billion) in the month.
As another sign of the Chinese governments' efforts to maintain
a stable yuan, the country has taken measures to curb illegal
capital inflows.
The influx of hot money in a gamble that China would revalue its
currency was estimated to reach as much as about US$30 billion in
the first half of this year.
(China Daily September 2, 2003)