China’s central bank said yesterday US accusations that it was manipulating the yuan were misleading, a day after Beijing cautioned US Secretary of State Hillary Clinton to handle their diplomatic ties with care.
The remarks from Su Ning (蘇寧), a vice governor of the People’s Bank of China, were the bank’s first public reaction to comments from US Treasury secretary-designate Timothy Geithner, who said this week that Beijing was manipulating its currency exchange policies to gain an unfair trade advantage.
“These comments are not only out of keeping with the facts, even more so they are misleading in analyzing the causes of the financial crisis,” Su said of Geithner’s comments to the Senate Finance Committee, Xinhua news agency said.
The exchange suggests a testy start to relations between the administration of US President Barack Obama and Beijing, which may tarnish vows of cooperation in combating the global economic slowdown and security threats.
China worries that its already slowing exports will be even harder hit by US policies to narrow their trade imbalance.
Many US lawmakers believe the yuan is much undervalued, giving Chinese exporters a big advantage that they blame for US job losses and the US trade deficit, which hit a record US$256.3 billion in 2007.
Su did not directly accuse Geithner of trade protectionism. But the Chinese official’s warning was clear enough.
“We believe that faced with the financial crisis there should be a spirit of self-criticism,” Su said while visiting a business newspaper’s office in Beijing.
“The international community is currently working together in actively responding to the financial crisis and it must avoid exploiting different excuses for renewing or encouraging trade protectionism, because these are of no help in withstanding the financial crisis,” Su said.
Su’s swipe at Geithner came after China’s foreign minister urged Clinton to be careful with sensitive issues that could strain ties, calling the relationship between their nations one of the world’s most important.
Foreign Minister Yang Jiechi (楊潔箎) made the remarks to Clinton, settling into her new job as Washington’s top diplomat, in a telephone call on Friday, the Chinese Foreign Ministry Web site reported yesterday.
“The China-US relationship is one of the world’s most important bilateral relations,” Yang told Clinton, the report said.
Each side should “respect and show consideration for the other’s core interests and appropriately handle differences and sensitive issues,” he said.
The report did not specify those issues, but Beijing considers Taiwan its most sensitive topic in dealings with Washington. China has also been angered by US pressure over human rights and Tibet.
Yang, a former ambassador to Washington, said the two powers should “handle bilateral relations by adhering to a strategic high-point and a long-term perspective.”
Ties between the US, the world’s biggest economy, and China, with its bulging exports and foreign exchange reserves, have also been strained by trade disputes that could worsen during the global economic slowdown.
Under former US president George W. Bush, the Treasury Department urged Beijing to move to a market-determined exchange rate and has seen some progress since July 2005.
But it refused to formally call China a currency manipulator, which under US law would require the Treasury Department to begin “expedited” negotiations with Beijing to reduce China’s trade surplus and eliminate any “unfair” currency advantage.
The China Daily, an English-language paper that often reflects Beijing’s official policy, said Geithner’s position was “a clear move away from the stance of the Bush administration.”
Xinhua echoed that view.
“This may signal that, with the Obama administration in office, China faces growing pressure from US trade protectionism,” it said, citing Beijing economists.
Selig Harrison, director of the Asia program at the Center for International Policy in the US, said it was “very ill-advised for the new administration to confront China as if this were 10 years ago and we were in a strong financial position internationally.”
“We are dependent on Chinese goodwill for our economic survival and viability and, therefore, it seems to me that this type of posture is very risky,” Harrison said.
Bonnie Glaser, an analyst with the Center for Strategic and International Studies think tank, said the Chinese have said during the past several months that they want a good start to their relationship with the new US administration.
“Everybody just needs to be a little patient on this,” Glaser said. “I would not draw any premature conclusions that the administration has decided to take a tougher stance and hopefully the Chinese will be patient while the administration works this out.”
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