China Responds to U.S. Criticism of Yuan Policy

Hitting back at mounting pressure from the United States on the issue of yuan revaluation, China reiterated its policy for reforming the exchange rate mechanism.

"As to the question of when and how (to reform the exchange rate policy), we will make decisions according to China's and the world's economic situation," said Foreign Ministry spokesman Qin Gang on Monday.

Qin urged U.S. congressmen to stop blaming other nations for economic problems in the United States, as pressure on yuan exchange rate reform builds.

"It's unreasonable to politicize the yuan exchange rate issue or engage in trade protectionism against China under the guise of the exchange rate issue. Doing so will only harm both sides," Qin added.

U.S. Treasury Secretary Timothy Geithner said at a congressional hearing last Thursday that China's refusal to revalue its currency impedes global economic reforms.

Some U.S. congressmen are pushing for a trade sanctions bill targeting countries "whose currency exchange rate is not equal to fair value."

China does not intend to pursue trade surpluses and is actively increasing its imports from the United States to push for sound and balanced trade ties, Qin said.

"A lot of facts prove that the yuan exchange rate is not the major cause of imbalances in China-U.S. trade," Qin said.

There have been no remarkable changes in the U.S. trade deficit with China even as the yuan appreciated 21 percent against the U.S. dollar since China began reforming the yuan exchange rate mechanism in July 2005, he said.

Qin attributed the trade imbalance to the international division of labor, economic globalization and U.S. restrictions on high-tech exports to China.

He said that the appreciation of the yuan will not solve trade imbalances or major economic problems in the U.S., pointing specifically to the low savings rate and high unemployment rate.