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Clean your house first, Beijing tells Washington

A Chinese official has rejected US pressure for an early end to China's currency controls and said Washington should take action on its soaring trade deficits instead of blaming other countries.

The comments on Sunday by an official of China's foreign exchange regulator came after US President George W. Bush and other officials called on Beijing last week to end its policy of tying the value of its currency, the yuan, to the US dollar.

Bluntly said

"This we cannot accept. I say this in a very blunt manner," said Wei Benhua (魏本華), vice director of the State Administration of Foreign Exchange, speaking at a gathering of Asian business and political leaders in southern China.

The US and other Chinese trading partners say Beijing's fixed exchange rate for its currency, the yuan, is too low and gives China's exporters an unfair price advantage.

For the first two months of this year, the US trade deficit was running at an annual rate of US$717.2 billion -- a full US$100 billion above the record imbalance of US$617.1 billion last year.

`Your problem'

"I made it clear to them: This is your problem. You should put your own house in order before you blame your neighbors," Wei said, referring to a recent meeting he had with US counterparts.

Wei was attending the Boao Forum for Asia, an annual conference promoted by China as a counterpart to elite Western business gatherings.

Chinese leaders say they plan to let the yuan trade freely on world markets, but they say doing so immediately would damage the country's frail banks and financial industries.

"China has no time schedule for the reform," the official Xinhua News Agency quoted Wei as saying. The government "cannot decide a proper time until the basic conditions mature."

Wei blamed the US trade deficit on "a flawed US economic policy" and said China would make currency decisions based on its own economic needs, the reports said.
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