Chinese Premier Wen Jiabao (溫家寶) has promised the nation’s struggling exporters a stable exchange rate in a move that might fuel tensions with Washington over Beijing’s currency controls as the global economy weakens.
Wen’s pledge, reported by Xinhua news agency and state radio, comes after the US Senate approved a measure to allow higher tariffs on Chinese goods that critics say are unfairly cheap because of an artificially undervalued currency.
Beijing’s exchange rate controls are especially sensitive at a time when other nations are trying to revive growth by boosting exports and complain that a weak Chinese yuan is widening the country’s swollen trade surplus.
Wen’s pledge on Friday at a trade fair in southern China came after export growth suffered an unexpectedly steep decline last month, hurt by a fall in sales to Europe amid the continent’s debt crisis.
Wen promised a “basically stable exchange rate,” Xinhua said.
He pledged to maintain -export-related tax rebates and other support.
US manufacturers complain the yuan is undervalued by up to 40 percent, giving China’s exporters an unfair price advantage and wiping out US jobs. Beijing has allowed the yuan to gain by about 7 percent against the US dollar since June last year in tightly controlled trading, but that is not as fast as critics want.
The measure approved on Tuesday by the Senate would allow Washington to raise tariffs on goods from countries that the US Treasury concludes are manipulating exchange rates for a trade advantage. The bill is not expected to become law because it lacks the support of the leadership of the US House of Representatives, which has yet to vote on it.
China’s government reacted angrily to the measure, dismissing it as protectionism at a dangerous time for the shaky world economy and warning that trade relations would be damaged if it were allowed to become law.
China’s economy, the world’s second-largest, is relatively robust, with growth forecast by the World Bank of 9.3 percent this year. However, weakening exports by Chinese manufacturers that employ millions of people could lead to layoffs and social tensions.
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