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China push for yuan flexibility

12-29-2011 11:30 BJT

CHINA will continue to push for an increasingly flexible yuan exchange rate and boost domestic consumption, a foreign ministry spokesman said yesterday after the United States Treasury declined to name China as a currency manipulator.

Since June last year, the yuan exchange rate had become increasingly flexible, spokesman Hong Lei said at a daily news briefing in Beijing.

China's foreign trade is balanced overall and the percentage of trade surplus to GDP is declining, he said.

The nation's current account surplus has been dropping as a percentage of GDP, according to official figures.

In the first three quarters of this year, the surplus was 3 percent of GDP, compared to 5.1 percent in the same period of last year.

"China is going to continue to increase flexibility in the yuan exchange rate and encourage domestic consumption," Hong said.

In its semi-annual report to Congress on the currency policies of major trading partners, the US Treasury said the yuan was still undervalued although it did not label China as a currency manipulator.

The Treasury said that with China's US$3.2 trillion foreign exchange reserves and current account surplus, "the real exchange rate of the renminbi is persistently misaligned and remains substantially undervalued." In recent years, the US has been putting pressure on China to make the yuan exchange rate more flexible.

Some US politicians argued that the yuan's undervalued exchange rate gave Chinese exports an unfair advantage in overseas markets.

 


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