China rejects US pressure over currency

[September 17, 2010]  BEIJING (AP) -- China rejected U.S. Treasury Secretary Timothy Geithner's criticism of its currency controls and warned Thursday that continued pressure might worsen the situation.

Geithner complained in testimony prepared for two congressional hearings Thursday that China's currency and other policies are hurting the United States.

Critics say Beijing keeps its yuan undervalued, giving its exporters an unfair price advantage and swelling its huge trade surpluses.

"The appreciation of the renminbi can't solve the trade deficit with China," said Foreign Ministry spokeswoman Jiang Yu, referring to the currency by its other official name. "Pressure cannot solve the issue. Rather, it may lead to the contrary."

China promised more exchange rate flexibility in June but the yuan has risen by only about 1 percent against the dollar since then.

"We are concerned, as are many of China's trading partners, that the pace of appreciation has been too slow and the extent of appreciation too limited," Geithner said.

Some American lawmakers are pushing for punitive action if China fails to move faster.

The yuan was allowed this week to rise to its highest level against the dollar since June in government-controlled trading in an apparent effort to defuse the dispute.

Asked whether the rise was coincidence, Jiang referred questions to the Chinese central bank.

[Associated Press]

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