China adamant on yuan

By Qiu Wei

The Ministry of Commerce Tuesday rejected intensified calls by US lawmakers for a stronger yuan, saying trade surplus is not caused by the foreign exchange rate.

"Politicizing the exchange rate issue wouldn't be helpful to the coordinated efforts tackling the economic crisis," ministry spokesman Yao Jian told reporters in Beijing.

The trade surplus is an outcome and phenomenon of globalization, Yao said, urging the United States to be an advocator of free trade rather than obstructer.

"The United States ... shouldn't ask others to raise their currency for the sake of its own export expansion. That would be an egotistical practice," Yao said.

The remarks came a day after a group of 130 bipartisan Congressmen dramatized the blame game by signing a letter to Treasury Secretary Timothy Geithner and Commerce Secretary Gary Locke, demanding the Obama administration identify Beijing as a currency manipulator in a report due next month.

The US Treasury has not labeled China as a state that manipulates its currency, the renminbi, since 1994.

"Maintaining its currency at a devalued exchange rate provides a subsidy to Chinese companies and unfairly disadvantages foreign competitors… The devaluation of the RMB also exacerbates the al-ready severe U.S.-China trade deficit," says the letter posted on the website of Congressman Mike Michaud.

In a bid to push US President Barack Obama, who urged China Thursday to adopt a "market-oriented" exchange rate, the US legislators said in the letter that the cheap yuan undermines the competitiveness of US exports to China and also called the Treasury to engage China in negotiations and suggested it should file a formal complaint with the World Trade Organization.

China's major trading partners claimed the yuan was kept artificially low to boost exports. But Beijing, the world's biggest exporter, stood determined against mounting foreign pressure for currency appreciation.

Premier Wen Jiabao said Sunday that he did not believe the yuan was undervalued and Beijing will stick to a "stable yuan". But He acknowledged the willingness to push ahead reform of the yuan's exchange rate mechanism.

Zhao Xijun, deputy dean of the School of Finance at the Renmin University of China, said the exchange rate of the renminbi should be decided by the country's macroeconomic situation, international payment balance and the supply and demand of currencies in the market.