Media says currency debate ‘meaningless’

China’s state news agency yesterday urged the United States to put an end a “meaningless quarrel” over its yuan currency, a day after Washington declined to name Beijing a currency manipulator.
The US Treasury said Tuesday that China’s yuan is still significantly undervalued, although it refrained from saying Beijing manipulates the currency, which could lead to retaliatory action by Congress.
China’s official Xinhua news agency praised the US Treasury decision in a commentary, saying it sent a “positive signal” that would soothe financial markets and promote trade.
“It is time to move beyond the useless, meaningless quarrel over the exchange rate and look to the broader picture and new areas for both bilateral and global trade cooperation,” it said.
US officials have long accused China of keeping its currency artificially low, fuelling a flow of cheap exports that helped send the US trade deficit with China to more than USD 270 billion in 2010.
But China defends its exchange rate regime, saying it is moving gradually to make the yuan more flexible.
Yuan “exchange rate reform and the internationalisation of the [yuan] will be a gradual and long-term process,” the commentary said.
“Pushing for a sharp rise or decline in [the] exchange rate or seeking a once-for-all solution would be both unrealistic and harmful.”
The US Treasury said the yuan had risen 7.5 percent against the dollar in the 18 months since Beijing began allowing a managed appreciation, and by 12 percent if China’s high inflation rate is figured in.
Nevertheless, it said the level of appreciation was “insufficient” and more progress was needed.