Chinese scholars and Internet users Wednesday voiced their overwhelming opposition to legislation proposed by US senators to punish China for its so-called currency manipulation.
More than 96 percent of about 7,500 Web users who participated in an online poll by huanqiu.com say China was justified to stand against US pressure and ignore its calls for yuan appreciation. The currency dispute seems to have triggered strong sentiments among the public of both countries.
China has a timetable and a pace to follow in foreign exchange reform, and a one-off appreciation of the yuan is not taking place any time soon, analysts said Wednesday, amid escalating foreign pressure on Beijing to revalue its currency.
Washington has become increasingly vocal on the issue, locking China and the US in a wrangle over the value of the yuan,
in an argument in which confrontational actions seem to be brewing.
Taking an apparently tougher line, US senators unveiled Tuesday legislation that threatens heavy penalties if Beijing refuses to act. The bill would punish currency manipulation as an unfair subsidy and could trigger retaliatory actions.
"There is no bigger step that we can take to promote job creation here in the US than to confront Chinese currency manipulation,"said Democratic Senator Chuck Schumer, one of the 14 senators who backed the bill.
US Treasury Secretary Timothy Geithner warned Tuesday of a continuing high unemployment rate, currently at 9.7 percent. More than 8 million people in the US are believed to have lost their jobs since the recession began in late 2007.
He Weiwen, managing director of the China Society for World Trade Organization Studies, said the latest US moves were merely due to political concerns and that it is not necessary to strengthen the yuan.
"China is by no means in any position to sacrifice its own interests to help the US to boost employment. The US should not look for a solution in the yuan,"He said. "The US administration can't simply divert its domestic mess to other countries."
He offered that China could take countermeasures if the US ultimately recognizes Beijing as a currency manipulator, citing moves including appealing to the WTO, imposing similar penalties on US imports, and halting large procurements from the US.
Jiang Yong, of the China Institutes of Contemporary International Relations, said Washington was attempting to force China to make concessions on other issues by putting pressure on the yuan, such as increasing its holding of US Treasury bonds.
"To single out China's yuan policy will provide an excuse for the US to resort to trade protectionism,"Jiang said.
The introduction of legislation followed increased pressure by US lawmakers Monday ahead of November mid-term US elections, who urge Geithner to determine that Beijing manipulates its currency in a report due next month.
China reinforced its position Tuesday and rebuffed the calls. Commerce Ministry spokesman Yao Jian said the country's managed floating exchange rate system, in place since 2005, is market-based and the value of the yuan was not to blame for global trade imbalances.
The International Monetary Fund weighed into the argument Wednesday, saying the yuan is "very much undervalued"and appreciation is part of global economic rebalancing.
"It cannot be avoided, in some cases exchange rates have to appreciate, and that's the debate which is very well known about China and the value of the renminbi,"IMF managing director Dominique Strauss- Kahn told the European Parliament's economic affairs committee in Brussels.
The World Bank also joined the debate Wednesday, urging Beijing to let its currency rise to contain inflation and stop the economy overheating, as the bank predicted that China's economic output will grow by 9.5 percent this year, higher than the country's own annual target of 8 percent.
"Inflation expectations can be contained by a tighter monetary policy stance and a stronger exchange rate, while monetary policy also has a key role to play in containing risks of asset price bubbles,"the World Bank said in its latest quarterly update on China.
Backed by a huge government stimulus package, China registered an 8.7 percent GDP growth last year. Amid fear of inflation, the authorities moved to control lending to rein in asset bubbles and an overheating of the economy.
Jiao Chen, of the Center of Economy and Diplomacy at Tsinghua University, said a stronger yuan would cause more harm than benefit to China, as currency appreciation af-fects the national economy as a whole and therefore China's core interest.
"The exchange rate dispute is a reflection of the US' deep concerns over China's fast development,"Jiao said. "So it is no surprise they stepped up attacks on the currency policy."
But Jiao also cautioned that China might suffer more than the US if a trade war erupted, saying "China has no choice but to accept that situation."
Zheng Jianmin, a professor at the University of International Business and Economics, said China would not rush to any quick adjustment of its currency reform as sharp and frequent appreciation may cause China to suffer what befell Japan in the early 1980s, when an abruptly strengthened yen triggered a chain economic reaction and burst a huge bubble.
"The yuan's value may rise bit by bit while policymakers will keep their watchful eyes on the market response before taking further steps,"Zheng said.
Serge Abou, the EU's ambassador to China, said yesterday that negotiations relating to the yuan would best be done "behind closed doors."
"There is no interest in using a megaphone and pressuring, I don't think pressure is the best way to solve very complex issues,"he said.
Global Times
