China hits back at US currency accusations

Thursday 4th February 2010

China has hit back in its ongoing spat with the US by dismissing suggestions made by Barack Obama that it was artificially depressing its currency to gain a trade advantage.

At a meeting with US senators on Wednesday, President Obama promised to take a tough line on China over its currency, implying that it was breaking trade rules.

Washington and other Chinese trading partners claim the yuan is kept undervalued, giving Chinese exporters an unfair price advantage and swelling Beijing's trade surplus.

In his regular press conference on Thursday the Chinese foreign ministry spokesman Ma Zhaoxu dismissed Mr Obama's comments and said that the yuan was priced correctly.

"At the moment, looking at international balance of payments and forex market supply and demand, the level of the yuan is close to reasonable and balanced. Criticism and pressing obviously is not helpful to solving problems," he said.

"We hope the US side could objectively and rationally see a number of problems in the Chinese-US economic and trade co-operation and appropriately deal with them via negotiation."

The dispute comes at a time of already strained relations between the two super powers. There are diplomatic concerns over President Obama's proposed meeting with the Dalai Lama, US sales of arms to Taiwan, and China's alleged cyber attack on Google.

On Wednesday Mr Obama declared: "The approach that we're taking is to try to get much tougher about enforcement of existing rules, putting constant pressure on China and other countries.

"One of the challenges that we've got to address internationally is currency rates and how they match up to make sure that our goods are not artificially inflated in price and their goods are artificially deflated in price. That puts us at a huge competitive disadvantage."

China reported a $196bn (£106bn) global trade surplus last year.

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