Obama presses China over yuan issues
Following a “candid” two-hour meeting yesterday between Chinese Premier, Wen Jiabao, and US President, Barack Obama, it appears China will still not bow to pressure over its currency.
The object of the meeting was to urge China to revalue its currency, the yuan. The US has previously expressed dissatisfaction that China is keeping the value of the yuan low to help its exporters at the expense of overseas competitors.
Trade groups have argued that the yuan, also referred to as the renminbi, is kept up to 40% below what its value should be against the US dollar.
In June, Beijing loosened its currency peg and, while the move was welcomed, the US said the yuan had appreciated just 1.9% against the dollar since that time.
US officials have said China needs to take more drastic action or face consequences. Many have already referred to China as a currency manipulator.
However, China has previously said keeping the yuan stable is “an important contribution” to global recovery and in a speech prior to the meeting, Wen said: “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.”
The House Ways and Means Committee is today expected to vote on a bill that would allow the Commerce Department to impose tariffs on China by considering the undervalued yuan a barrier to trade.
A vote in the House of Representatives could take place as early as next week.
While the legislation could strengthen Obama’s position, many economists fear it might just further anger Beijing.
Jeff Bader, a White House adviser on Asian affairs, comments: “These two countries have a history with each other, there are nationalist sentiments in both countries that can be stirred up should the problem stagnate.
“We do want to see calm and restraint on both sides, we do want to see them resolve it diplomatically soon,” added Mr Bader.