China defiant on currency issue
Leader questions 'interventionist attitude' after senators criticize yuan policy.
March 29 2007: 12:50 PM EDT


BEIJING (Reuters) -- China chided U.S. lawmakers Thursday for resorting to threats in their latest attempt to persuade Beijing to let the yuan rise faster.

Two leading U.S. Senate critics of China's currency policy said Wednesday they expected Congress to pass a "veto-proof" bill to force China to allow a greater appreciation in the yuan .


Asked about the legislative initiative, Foreign Ministry spokesman Qin Gang acknowledged that there was criticism in some U.S. circles of its large trade deficit with China.

"It needs both sides to take the principle of mutual respect to increase understanding and strengthen communication rather than resorting to pressure or threats," he told a news conference.

Sen. Charles Schumer, a New York Democrat, and Sen. Lindsey Graham, a South Carolina Republican, said their bill would be carefully crafted to abide by World Trade Organization rules.

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By Washington's figures, the U.S. trade deficit with China last year was a record $232.5 billion.

Critics say the big surplus is due in large part to a yuan exchange rate that they say Beijing keeps unfairly low, giving Chinese exporters a competitive edge in world markets.

But Qin said China's currency policies were not to blame.

"It is not reasonable or fair to blame China for problems in the U.S. economy," he said.

Qin also questioned why a country with a market economy would try to adopt an "interventionist attitude" when it came to policies of other countries.

"Should China's policies reflect its own market or the voices of people in another country?" he asked.

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The yuan, also known as the renminbi, has risen almost 5 percent since it was revalued by 2.1 percent against the dollar in July 2005 and untethered from a dollar peg to float within managed bands.

"On the question of the renminbi exchange rate, we have consistently adopted the principle of responsibility and independence," Qin said.

"On this issue, China always takes the fundamental interest of our social and economic development into account."

Any change in the value of the yuan or dollar affects such American businesses as Dell (Charts), IBM (Charts), Yahoo (Charts), and Wal-Mart (Charts).



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