China Rejects Currency Manipulation Charge

http://chinhdangvu.blogspot.com/2009/01/china-rejects-currency-manipulation.html

By EDWARD WONG
BEIJING — The central bank of China on Saturday rejected an accusation by President Obama’s nominee for Treasury secretary that China was manipulating its currency to give it an unfair advantage in exporting goods to the United States and other markets.

The assertion was made by the nominee, Timothy F. Geithner, in written remarks to the Senate Finance Committee as part of his confirmation hearing. The remarks were in documents made public on Thursday.
“President Obama — backed by the conclusions of a broad range of economists — believes that China is manipulating its currency,” Mr. Geithner said.
Xinhua, the state news agency, reported Saturday that Su Ning, the deputy governor of the People’s Bank of China, the country’s central bank, said that Mr. Geithner’s accusation would sidetrack efforts to determine the real cause of the global financial crisis.
“Also, we should avoid any excuse that might lead to the revitalization of trade protectionism, because it will do no good in the fight against the crisis, nor will it help the healthy and stable development of the global economy,” Mr. Su said, according to Xinhua.


In 2005, the Chinese government ended a strict peg between the Chinese currency, called the renminbi or the yuan, and the American dollar. Since then, the yuan has floated in a narrow band against the dollar. The value of the currency is now 6.84 yuan to the dollar.
In the article on Saturday, Xinhua also quoted Zuo Xiaolei, a senior analyst with China Galaxy Securities, a Beijing-based financial company, as saying that Mr. Geithner may have been using his comment to feel out the Chinese government’s response.
In addition, Ms. Zuo told Xinhua that “the price advantage of Chinese exports may not be a result of currency issues, but the country’s lower costs of labor, resources and land.”
The global financial crisis has resulted in foreign companies placing fewer orders with exporters in China, leading to a severe downturn in the export industry. Chinese leaders now say the nation must move away from an economy so dependent on exports.