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  • Feb 4th, 2005
  • Comments Off on China blasts threatened US deadline on yuan
China said Thursday that a threatened US bill giving it six months to revalue its currency, the yuan, would be the wrong way to handle the sensitive issue. "We believe this is not a way to resolve differences," foreign ministry spokesman Kong Quan told a regular briefing. "Every country's economic and financial policy are implemented and established based on the country's specific situation," he said.

A least a dozen US senators are said to have agreed to co-sponsor the bill which would give China "a window of 180 days" to revalue the yuan or face a 27.5 percent tariff on all Chinese manufactured goods entering the United States.

It is expected to be introduced into the US Senate as early as Friday.

A ranking state-employed economist said the government was unlikely to be intimidated by such a move.

"China doesn't have to change the yuan exchange rate under pressure from the outside," said Zhu Baoliang, a researcher at the State Information Centre, an elite Beijing think tank.

"If the Chinese government wants to change its policy, it should be at a time when it's required by domestic needs," he told AFP.

"Personally I agree the yuan should change at a proper time but in accordance with the domestic economic situation, not because of international pressure," Zhu said.

The yuan, now fixed at 8.28 to the dollar, is kept in a narrow band by the People's Bank of China, the central bank. This level is considered too weak by many financial observers and made worse by recent weakening of the dollar.

The United States trade deficit with China is ballooning and may have hit 150 billion dollars last year or one-fourth the US deficit with all countries, analysts say.

"Ensuring and maintaining the rapid, healthy and stable development of China's economy helps not only China but also the mutually beneficial economic and trade co-operation with Asia and other countries in the world," Kong said.

China will send two senior officials to the G7 meeting in London this week but it is unlikely Beijing will make any major announcement on its fixed currency system, analysts say.

Copyright Agence France-Presse, 2005


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