2010/09/23

No basis for drastic appreciation of yuan: Chinese premier

NEW YORK, September 23, 2010 (AFP) - China's premier said Wednesday that there was no basis for a drastic appreciation of the yuan, responding to increasingly angry claims in the United States that Beijing was keeping its currency low.

"There is no basis for a drastic appreciation of the renminbi (yuan)," Prime Minister Wen Jiabao said in a speech before the US-China Business Committee in New York.

"If the renminbi appreciates by 20 to 40 percent according to the requests of the US government, we do not know how many Chinese companies will go bankrupt and how many Chinese workers will be laid off and how many rural workers will go back to their homes and there will be major turbulence in the Chinese society," he said, according to a translation of his speech.

Washington has been toughening its rhetoric over China's currency handling in recent weeks, accusing Beijing of keeping its currency artificially low against the dollar to make its exports more competitive.

President Barack Obama warned earlier this week that the yuan "is valued lower than market conditions would say it should be," calling on the Chinese to do more to promote "fair" trading conditions.

 "What we've said to them is, you need to let your currency rise... you're getting wealthier, you're exporting a lot, there should be an adjustment there based on market conditions," he said during a town hall style-meeting on CNBC television.

"They have said 'yes' in theory, but in fact they have not done everything that needs to be done," said Obama, who will meet Wen in New York on Thursday.

US Treasury Secretary Timothy Geithner also complained last week that it was "past time for China to move" on the yuan and lift trade barriers.

Despite June's "important" pledge by Beijing, Geithner said the Chinese currency's value was "essentially" unchanged in the past two years because of "very substantial" intervention by the authorities.