Economy

Yuan solution will be found

By Cheng Guangjin (China Daily)
Updated: 2010-03-19 06:39

Yuan solution will be found
Washington’s ambassador to Beijing Jon Huntsman is the focus of media attention after delivering a speech on Sino-US relations at Beijing’s Tsinghua University on Thursday.[Yang Shizhong/China Daily]

US envoy says 'important talks' will be held soon

Beijing: The top US envoy to China on Thursday expressed confidence that the two countries will find a solution to the yuan exchange rate.

"I think in due time, it will be resolved to the satisfaction of both parties," Ambassador Jon Huntsman told an audience of students at the prestigious Tsinghua University.

The two sides are expected to hold "important negotiations" over the exchange rate in the coming weeks, he said, adding that the US Treasury will take long-term trade relations into account when deciding on the issue.

Some US politicians have long criticized China for "deliberately keeping its currency undervalued".

On Tuesday, five senators proposed imposing stiff penalties against China if it refuses to revalue its currency. The move came after 130 congressmen wrote a letter demanding the Barack Obama administration take action to force China to raise the value of the yuan.

The US Treasury has the option of declaring Beijing a currency manipulator in a report due out next month, which could set the stage for possible tariffs on Chinese goods.

Beijing has so far showed no signs of budging, saying it will stick to a stable exchange rate. Officials also said the country has been made a "scapegoat" for the US' own economic woes prior to Congressional mid-term elections.

Foreign Ministry spokesman Qin Gang reiterated at a regular briefing on Thursday that the yuan's exchange rate is not the main cause of the US trade deficit with China, and that Washington's demands for a stronger yuan were "unfair and harmful" to Sino-American ties.

To resolve trade friction, "both sides should remain calm and rational", Qin said.

On the same day, a Chinese semi-official trade group said a stronger yuan will spell the end for many Chinese exporters in labor-intensive sectors such as garments and furniture.

"If the yuan rises, these companies will face the immediate risk of going bust as their profit margin is already very narrow," said Zhang Wei, vice-chairman of the China Council for the Promotion of International Trade.

"So for these companies, the consequences would be disastrous," he told a news conference.

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