China, bristling at calls to revalue the yuan, ruled out any change to its currency peg during a visit by US Treasury Secretary John Snow yesterday but offered a token easing of its capital controls.
Snow, who landed in Beijing yesterday afternoon, is under pressure at home to urge China to revalue the yuan, which is pegged to the dollar, to save jobs at hard-pressed US factories.
The International Monetary Fund weighed in yesterday, saying it was in China's best interests to move towards a more flexible exchange rate system.
"Such a move would improve the central bank's ability to control money and credit growth, and also help cushion China's economy from domestic and external shocks," IMF Managing Director Horst Koehler said in a statement.
But China stood its ground.
"There won't be any change in the exchange rate just because someone is visiting China," a spokesman for the central People's Bank of China said.
Shortly after Snow arrived, Foreign Ministry spokesman Kong Quan (
"The stable exchange rate of the renminbi is conducive to the economic stability and development of China, Asia and the world," he said.
American manufacturers claim a cheap yuan, held at around 8.3 to the US dollar, gives Chinese rivals an unfair edge.
Snow has said little publicly while in Asia about China's currency but Japanese Finance Minister Masajuro Shiokawa said they had agreed in talks in Tokyo the market should set the value of the yuan.
Snow was due to meet central bank Governor Zhou Xiaochuan (周小川) and Finance Minister Jin Renqing (金人慶) yesterday.
"I think John Snow is wasting his time because China is not going to revalue its currency because the US wants them to," the Economist Intelligence Unit's chief economist, Robin Bew, said in Hong Kong.
China is worried about the damage a revaluation may cause to export growth that has helped fuel one of the world's fastest-growing economies.
The state-run China Daily newspaper said it did not want the yuan to be caught up in the 2004 US presidential race.
"China's currency, unfortunately, is in a position of finding itself involved in the finger-wagging sessions that accompany this essentially American saga," it said in a commentary under the title "Don't meddle with the yuan."
But Beijing, continuing with a series of adjustments to capital controls aimed at easing the yuan's appreciation, said it would raise the limit on the amount of foreign exchange Chinese travellers could buy from banks.
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