China unyielding on yuan as U.S. pressures

The heat in the long-running dispute over China's exchange rate regime is rising quickly, with a bipartisan bill introduced on Tuesday in the U.S. Senate that aims to press Beijing to let its yuan currency rise.

The Managing Director of the International Monetary Fund, Dominique Strauss-Kahn, added to the pressure on Beijing, saying that the yuan is undervalued.

Focusing on the yuan will not help to solve problems in the Sino-U.S. bilateral trade relationship, a Chinese Commerce Ministry official told Reuters.

“We oppose the over-emphasis on the yuan's exchange rate,” the official said, when asked about the bill. “The yuan's exchange rate is not a magic potion for solving global economic imbalances.”

In Geneva, a senior China diplomat said the U.S. lawmakers were unfairly blaming Beijing for their own woes.

“They should not blame the problems they have by finding a scapegoat in China,” He Yafei, China's new ambassador to the United Nations in Geneva, told a briefing.

The apparent hardening of positions drove the yuan to a three-week low against the dollar in the offshore forwards market, implying just 2.4 percent of appreciation over the next 12 months.

Ding Zhijie, a professor at the University of International Business and Economics in Beijing, said U.S. pressure on the exchange rate was “totally counter-productive.”

“With such heavy pressure from the United States, any move would look like giving in to foreign pressure — for both the Chinese government and the Chinese public, it would be unacceptable,” said Ding, who provides advice to the government.

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