2011/01/19

US: more needed from China on yuan

WASHINGTON, January 18, 2011 (AFP) - The White House said Tuesday hours before Chinese President Hu Jintao's arrival in Washington that Beijing must do more to allow the yuan currency to rise against the dollar.

"We believe more must be done in terms of their currency," White House spokesman Robert Gibbs said on Tuesday, ahead of Hu's two-day state visit and onward trip to Chicago.

"They have taken some limited steps... we believe that more must be done.      "That is an opinion that is held not just by this country but by many countries around the world," Gibbs said.

The United States has repeatedly called on China to allow the value of the yuan to rise, arguing that it is being kept artificially low to boost Chinese exports to the detriment of the crisis-scarred US economy.

Last week, US Treasury Secretary Timothy Geithner said that there had been some evidence of a slow rise in the yuan in recent months, and added that it was inevitable that it would move higher.

He also sought to lower the tone of the currency debate by arguing that rising inflation in China was also acting to make US goods and companies more competitive in the Chinese market.

Beijing, under intense pressure from US and European lawmakers over its currency, pledged last June to let the yuan trade more freely against the dollar. Since that time, it has gained about 3.6 percent against the dollar.

In the past month the pace of appreciation has accelerated, with the currency gaining 1.1 percent as the United States pressed Beijing for action.

China's tight management of the yuan's value grossly undervalues the currency by as much as 40 percent and gives Chinese exporters an unfair trade advantage, critics argue.

But with its sights set on the yuan eventually rivaling the dollar as a global currency, Beijing has introduced a range of policy changes aimed at making the yuan easier to convert for investment and to use internationally.