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May 20, 2005

Chinese experts: US politicizes the currency issue

The US Treasury, in its twice-yearly report to Congress on exchange rates and trade, put Beijing on notice that it expected a revaluation of the Chinese currency (renminbi or yuan) within six months, in order to reduce the US trade deficit with China.
Financial experts in China accuse the US of trying to politicize the issue. "This is an old trick of the US to make currency politicized", said Li Yang, head of the Institute of Finance at the Chinese Academy of Social Sciences. Yi Xianrong, of the same Institute, said that the labor cost gap between China and the US is so huge that even if the renminbi is revalued by 50% or 100% (which is not realistic) the competitiveness of "made in China" products would not decrease enough to have a significant impact on bilateral trade. Professor Zhou Shijian, a senior trade expert from the Beijing-based Chinese Association for American Studies, also said that a revaluation of the yuan will not affect the US trade deficit. Li Jiange, deputy director of the Development and research center of the State council (a governmental institution) said "it's unrealistic for the US to solve its own problems by way of forcing other currencies to revaluate". He added that China's savings rate is two to three times that of the US and even if its trade deficit with China is removed, it will be exhibited in trade with other countries.

Posted May 20, 2005 12:54 AM

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