BEIJING: China defended again its exchange rate policy and said its trade surplus would likely slump this year, just days ahead of talks with the United States on commerce and other issues.Commerce ministry spokesman Yao Jian said the issue of the Chinese currency’s value should not be ‘politicised’.
“The improvement of the yuan’s exchange rate regime is the Chinese government’s own business,” Yao told a news conference.
He had been asked to respond to comments by US Treasury Secretary Timothy Geithner, who said he expected China would allow the yuan to rise against the dollar.
“China will improve the yuan’s exchange rate regime according to the development of trends in the global economy as well as the Chinese economy,” Yao said.
Beijing is under growing international pressure, led by the United States, for a stronger yuan.
The currency has effectively been pegged at about 6.8 yuan to the dollar since mid-2008.
Critics say this gives Chinese exporters an unfair advantage by making their products relatively cheaper.
Yao’s comments came ahead of a twice-a-year ‘strategic and economic dialogue’ at which Geithner and US Secretary of State Hillary Clinton will meet their Chinese counterparts in Beijing on May 24 to May 25.
Geithner has eschewed demands from Congress for US sanctions against China for currency manipulation, preferring quiet diplomacy as US unemployment festers and Congress heads towards mid-term elections later this year.
Yao predicted China’s trade surplus, a long-time source of friction with its trading partners, would fall this year as exports are expected to stay weak, comments apparently indicating Beijing will not soften its stance on the yuan.
“The full-year trade surplus will slump by a large margin and the trade imbalance problem will improve,” he said.
“We will keep export policies generally stable given the volatility of the international financial markets and that Chinese exporters were still facing difficulties.”
China posted a surplus of US$16.1 billion in the first four months of the year, down 78.6 per cent year-on-year, after recording a monthly deficit of US$7.2 billion in March its first in six years.
Yao predicted last month the trade surplus would shrink by US$100 billion this year from 2009, when the figure stood at US$196 billion. — AFP