Freer RMB movement 'can answer US claims'

At the fifth US-China Strategic and Economic Dialogue in July, China pledged to continue its exchange rate reform by increasing the flexibility of the renminbi exchange rate and letting the market play a bigger role in exchange rate formation.

China "needs to disclose foreign exchange market intervention regularly … and to promote exchange rate and financial market transparency", the US report said.

He Weiwen said that such statements about China are nothing new.

"It is merely eclecticism to maintaining good trade and economic relations with China but at the same time satisfying the Congress."

Under the Omnibus Trade and Competitiveness Act of 1988, the Treasury Department was asked to report "whether countries manipulate the rate of exchange between their currency and the United States dollar for purposes of preventing effective balance of payments adjustment or gaining unfair competitive advantage in international trade".

"Facing such accusations, we could only focus on our own businesses, via pushing forward financial reform and market-led pricing mechanism of the renminbi," He said.

But Lu Zhengwei, chief economist of Industrial Bank Co, said the valuation of the renminbi faces a dilemma: The currency is already overvalued in domestic market, which weakens the real economy, yet still is under pressure by the US to appreciate.

A research note from UBS AG said that emerging markets have seen their currencies appreciate significantly against the dollar in recent years, but such a trend will not continue in the next two years.

UBS estimated the exchange rate of the renminbi against the US dollar will stabilize at 6.10 at the end of 2014 and 2015.