China denies cheap yuan

City A.M. Reporter
PRESIDENT Barack Obama met Chinese Premier Wen Jiabao yesterday as US lawmakers appeared closer than ever to acting on long-standing threats to penalise China for keeping its currency artificially low.

Wen staged a pre-emptive defence of China’s policies ahead of the meeting, flatly rejecting any link between the level of the Chinese yuan, or renminbi, and US trade deficits.

“The main reason for the US trade deficit with China is not the renminbi exchange rate, but the structure of trade and investment between the two countries,” he said in a speech to US executives and China experts in New York.

Wen’s talk came after a US House of Representatives committee scheduled a vote for today on a China currency bill that would treat China’s “undervalued” currency as an export subsidy and allow the US Commerce Department to impose countervailing duties on Chinese products to offset the undervaluation.

Critics say China deliberately undervalues its currency by as much as 25 per cent to 40 per cent.