Opinion

Imposing pressure on RMB won't work

By Huang Shuo (chinadaily.com.cn)
Updated: 2010-09-27 16:19

Chinese Premier Wen Jiabao talked with US President Barack Obama at the United Nations on September 23 (local time in New York) for about two hours. Most of the conversation focused on China's currency issue, which has led to conflicts and disputes between the largest developing and developed countries in the world.

Before that, global stock markets rallied as the RMB exchange rate hit a five-year high against the US dollar.

As the yuan broke the 6.70 barrier against the US dollar on Sept 21, many Western analysts said they believed that the appreciation of the yuan by the People's Bank of China would relieve pressures from the Western world, especially from the United States and European countries.

Related readings:  China's yuan weakens against US dollar Monday  Wen: Don't blame yuan for deficit  Yuan caught in a US political tangle  A rising yuan not cure to US trade deficit

The US has linked the RMB exchange rate issue with its unbalanced trade with China. The US accused China of artificially keeping its currency cheap, advocating for appreciation of the yuan.

Earlier this month, US Treasury Secretary Timothy Geithner expressed dissatisfaction with the pace of the yuan's appreciation in testimony prepared for US congressional hearings on China's currency policy.

In response, China's Foreign Ministry spokeswoman Jiang Yu said at a media briefing that adding pressure will not resolve trade issues between China and the US. Jiang said the country's exchange rate reform will only be pushed forward in accordance with economic conditions and balance of international payments.

To solve the currency problem and achieve mutual benefits, peaceful talks with China, rather than adding outside pressure, is more sensible. China will not bend on its yuan policy and has its own approach to development issues such as climate change and human rights.

"Peaceful coexistence has today become both all that the US can afford militarily and economically and essential for US economic and national security," John Milligan-Whyte and Dai Min wrote in an article titled "Thomas Barnett recommends US never go to war with China." John Milligan-Whyte is the chairman and Dai Min is the president of the Center for America-China Partnership, an American think-tank studying Sino-US relations.

Just sit down and have a peaceful talk with China. US policymakers will have to make a choice different from the former administration.