Sun, Oct 03, 2004 - Page 1 News List

China tells US it will revalue yuan, but gives no date


In the face of growing international pressure, Chinese officials told top US officials on Friday that they would continue to push ahead with plans to float or revalue their currency, but avoided giving a date to begin the transformation.

This commitment fell short of the immediate action recommended this week by the International Monetary Fund (IMF) and of the demands being made by Democrats and Republicans alike. Some academic experts see reasons for China not to revalue.

Pressure has been building for the Chinese to announce a change at the meetings here of the IMF or at meetings with representatives of the G7 who met with China for the first time at a dinner on Friday. US Treasury Secretary John Snow said afterward that he told the Chinese that "we want the pace to accelerate."

Like the US, the other G7 members -- Britain, Canada, France, Germany, Italy and Japan -- have all said that continued, stable global economic growth requires China to relax its currency exchange rate immediately.

The dinner invitation has been seen as the first step for China's eventual inclusion in the group. And a senior Treasury official said after the dinner that the G7 would have more engagements with China.

In return, the industrialized world is hoping the Chinese will begin to adopt a more flexible currency exchange rate and start to right what is seen as an imbalance in global currency rates that has hurt Europe as well as the US.

Admission to the G7 would be the final confirmation that China's economic growth has lifted the country to the center of the global elite. The only Asian country in the group is Japan.

But in what is becoming a familiar ritual, China's first response on Friday was a joint communique promising greater efforts, but no timetable.

"The Chinese side reaffirmed China's commitment to further advance reform and to push ahead firmly and steadily to a market-based flexible exchange rate," the two nations said in the communique.

James Mann, a China expert and visiting academic at the Johns Hopkins University School for Advanced International Studies, said the Chinese had used this strategy for decades to avoid improving their policies on human rights in Tibet, missile nonproliferation and protecting intellectual property rights.

"They have a long track record of diverting attention away from doing something now or immediately by arriving at the beginning of a meeting and announcing what they plan to do way off in the future," Mann said. "Sometimes, in the end, they may actually do it."

Changing China's currency has become a focal point for those worried about the record US trade deficit and the loss of manufacturing jobs overseas. This week senior Democratic lawmakers filed a petition asking the administration to sue China at the World Trade Organization. The suit would contend that China's current inflexible exchange rate, 8.28 yuan to the dollar, amounts to unfair trading practices.

By pegging its currency to the dollar, China has kept the prices of its exports low and flooded the American market with cheap goods while keeping the price of imports high, choking competition, the lawmakers charged.

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