The US-China Business Council, a federation of American
corporations engaged in business relations with China, said on
Monday that it opposed attempts to force the Renminbi yuan to
appreciate.
John Frisbie, president of the council, made the remarks in an
exclusive interview with Xinhua at the ongoing China Business
Summit. He said the exchange rate of the yuan was only one of the
reasons behind China's huge trade surplus with the US.
The trade imbalance could only be solved through dialogue and
the reform of the Renminbi exchange rate had to be a gradual
process, said Frisbie.
The US has blamed the low exchange rate of the yuan against the
dollar for its expanding deficit with China. According to the
Chinese customs authority it reached a new monthly high of 18.8
billion dollars in August.
The deficit in the first eight months of the year totaled
US$94.65 billion (according to Chinese figures) fueling calls for
action from within the US.
US senators Charles Schumer and Lindsey Graham have said they'll
push for a vote by the end of September on their legislation to
impose 27.5 percent penalty tariffs on Chinese imports unless China
moves to allow a greater appreciation of the yuan.
Frisbie said he was unsure if the Senate would eventually vote
on the proposed bill or whether it would be adopted if it did. But
he indicated he was sure of at least one thing -- the US and China
shared the same goal of having a market-based, free floating regime
for the Renminbi.
Stephen Roach, chief economist of the leading US investment bank
Morgan Stanley, has said that an appreciation of the yuan wouldn't
help the US cut its deficit. Insufficient domestic savings and
excessive consumption, not the exchange rate of yuan, were the
fundamental reasons for the rising deficit, he said.
Frisbie proposed that China should reform its banking and
consumer loan systems and set up a sound social security system so
that Chinese people would be encouraged to use some of their bank
savings. In this way, he said, the Chinese economy would no longer
be driven by exports and investment but by domestic spending. Such
reforms would also help to solve exchange rate and trade deficit
issues.
The yuan's value had risen by about 3.8 percent against the
dollar in the 12 months since July 21, 2005, when China revalued
the currency by 2.1 percent and revised its trading system to link
the yuan's value to a basket of major currencies instead of just
the US dollar.
China has ruled out the possibility of any further appreciation
on the same lines. There will be no more "surprise adjustments"
Chinese Premier Wen Jiabao told foreign journalists in Beijing
recently.
(Xinhua News Agency September 12, 2006)