Economy

US should objectively judge China's yuan policy

(Xinhua)
Updated: 2010-03-19 09:13

WASHINGTON - The US government should objectively judge whether China manipulate its currency or not, US experts said, as legislators urge the government to label China as currency manipulator.

Under the pressure of the election year and high unemployment, US Senator Chuck Schumer and four other senators unveiled a legislation Tuesday threatening punitive duties on goods from China if it does not let its currency yuan appreciate against the dollar.

"There is little possibility that the US Treasury will announce that China is currency manipulator," Kenneth Lieberthal, senior fellow and director of John Thornton China Center of the Brookings Institution said when asked by Xinhua during a panel discussion held at the Washington based think tank on Thursday.

Both countries need to adjust their economic growth pattern, Lieberthal said.

He added the United States will use opportunities such as Chinese President Hu Jintao's scheduled state visit to the US and the Strategic and Economic Dialogue (S&E D) to address those issues.

Commenting on whether a stronger yuan will solve the US trade deficit problem, Barry Bosworth, another senior fellow of the Brookings Institution said that it is not clear that China's change of its exchange rate will help solve the US trade imbalance.

Instead, it will obviously benefit the other low-waged exporters, like Mexico and most Southeast Asian countries, he said.

"US and China are not direct competitors," Bosworth said. "We produce very few things that the other one produces. China is a low wage, assembly type process for trade, while US are high- tech, high capital goods. Our major competitors are Germany and Japan."

The US is "more interested in China as a market -- a place to sell our export. Therefore, we want to access to the Chinese market, lower level of trade restrictions, and rapid growth of domestic demand that might help the US" Bosworth added.

Their views echoed another panel discussion titled "China's economy in the post-crisis world," which was held Wednesday in the Carnegie Endowment for International Peace.

"Most other major currencies began to depreciate against the dollar after the Leman Brother's collapse in September 2009, but China kept yuan relatively stable," said Pieter Bottelier, senior adjunct professor of the Johns Hopkins University at Carnegie.

"If China really manipulated its currency, they should devalue the yuan since then in order to make profit," Bottelier said. "But China did not do that."

"It is a highly political year," said Albert Keidel, Senior fellow of the Atlantic Council of the US at the same occasion, "There is a tendency in the election year in the US to blame China."

Keidel said that it is hard to simply say that a currency is manipulated. He believes that the US Treasury Department will make objective judgment.