Beijing dismisses Washington’s mounting anger

By James Politi and Daniel Dombey in Washington and agencies

Published: February 3 2010 23:48 | Last updated: February 4 2010 10:05

China on Thursday dismissed US political pressure to revalue its currency, saying the yuan was already at a reasonable level and that China did not deliberately pursue a trade surplus with the United States.

”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,” Ma Zhaoxu, a Foreign Ministry spokesman told a regular news briefing, repeating China’s standard line on its currency.

”Accusations and pressure do not help to solve the problem,” he was quoted by Reuters as saying.

US political heat on China intensified on Wednesday after Barack Obama, president, raised the issue of a weak Chinese currency a day after the US Senate condemned cyberattacks on Google.

Speaking to Senate Democrats, Mr Obama warned that the US should not back down from trade with China.

“For us to close ourselves off from that market would be a mistake,” he said. But he added that currency rates needed to be addressed internationally “to make sure our goods are not artificially inflated in price and their goods are artificially deflated in price”.

Tensions between Washington and Beijing have risen in the wake of a $6.4bn (€4.5bn, £4bn) US arms deal with Taiwan and ahead of an expected meeting this month between Mr Obama and the Dalai Lama, the Tibetan spiritual leader.

US senators on Tuesday voted unanimously to condemn the cyberattacks on Google and other companies that caused the search engine group to threaten to quit China.

“It is important that the US not stand idly as China infringes on the free flow of information,” said Arlen Specter, the Pennsylvania Democrat.

A senior Democratic senator also asked 30 large technology groups to provide details of their human rights practices in China.

Dick Durbin, the Illinois senator and assistant majority leader, sent a sharply worded request for information to US groups such as Facebook, Apple, IBM, Amazon and Oracle and to international companies including Nokia, Vodafone, SAP, RIM and Toshiba.

He said Google set “a strong example in standing up to the Chinese government’s continued failure to respect the fundamental human rights of free expression and privacy. I look forward to learning more about whether other ... companies are willing to follow Google’s lead”.

Mr Durbin said he expected the responses to include information on the companies’ business in China and any efforts to ensure their products and services did not “facilitate human rights abuses by the Chinese government”.

Next week the congressional executive commission on China, which was created in 2000 to coincide with the country’s accession to the World Trade Organisation, will hold a hearing focused on the cyberattacks, including the intellectual property protection issues that it raised.

Dennis Blair, the US’s director of national intelligence, highlighted China’s “growing international confidence and activism” in testimony to Congress this week.

But he added that Beijing’s policies were largely set by its commercial interests and that its “core priority remains ensuring domestic stability”.

In his evidence, Mr Blair listed the global “cyberthreat” to the US ahead of all other threats Washington faced.

He described the recent cyberattacks on Google as “a wake-up call to those who have not taken this problem seriously”.

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On China, Obama says U.S. must addresscurrency rates

Reuters
Wednesday, February 3, 2010; 11:43 AM

WASHINGTON (Reuters) - President Barack Obama said on Wednesday it was important to address currency rates with trading partners such as China to ensure U.S. goods were not facing a disadvantage.

Obama said his administration was pushing China and other nations to enforce existing trade rules and open their markets in a reciprocal way.

"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," Obama told senators from his Democratic Party.

"That puts us at a huge competitive disadvantage."

A recent report by the Peterson Institute for International Economics estimated China's yuan was undervalued by about 30 percent against all other world currencies and about 40 percent against just the dollar.

The Washington think tank also said four other East Asian economies -- Hong Kong, Malaysia, Taiwan and Singapore -- needed to let their currencies rise in value to correct imbalances in global trade.

U.S. manufacturers have complained for years that Beijing's currency policies gives Chinese companies an unfair price advantage in international trade. However, China has resisted pressure on the issue and maintains its exchange rate policy is an internal matter.

Since taking office, Obama has twice declined to formally label China as a currencymanipulator but faces a third decision on that issue in April when the Treasury Department's next semi-annual report comes due.

Asked by Senator Arlen Specter whether he would support revising or revoking a trade treaty with China, Obama said that would be a mistake.

"Our future is going to be tied up with our ability to sell products all around the world, and China is going to be one of our biggest markets and Asia is going to be one of our biggest markets. And for us to close ourselves off from that market would be a mistake," he said.

"It's got to be reciprocal. So if we have established agreements in which both sides are supposed to open up their markets, we do so and then the other side is imposing a whole set of non-tariff barriers in place, that's a problem. And it has to be squarely confronted," he said.

The president, who cited a U.S. decision to impose a "safeguard" tariff on tire imports from China last year, said his administration was pushing for trade rules to be enforced.

"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 to open up their markets in reciprocal ways," he said.

(Reporting by Jeff Mason; Editing by Doina Chiacu)