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China Claims It's Not Manipulating Currency

Beijing rejected Monday the charge that it was keeping yuan artificially low against the dollar, but blamed another 'major economy' for keeping its own currency weak.

GENEVA (AP) -- China rejected Monday the charge that it was keeping the yuan artificially low against the dollar, but rather blamed another "major economy" for keeping its own currency weak.

China's trade minister Chen Deming didn't mention a specific country by name, but was widely understood to be referring to the United States.

Many in the West blame Beijing for pegging the yuan at unfairly low rates to help exporters undersell foreign competitors in global markets. Critics say the currency control has aided China's rapid rise this decade as an export powerhouse, costing manufacturing companies and jobs in Europe and the United States.

The yuan's low value against the dollar also distorts other foreign exchange rates, by causing the dollar to weaken against fee-floating currencies like the euro and pound.

Chen said criticism of China was unfair at a time when the stability of the yuan was contributing to global economic recovery, and noted that the currency has risen 20 percent in value since Beijing decided to loosen somewhat its peg to the dollar four years ago.

Meanwhile, "there is another major economy in the world which is devaluating its currency," Chen told journalists through a translator in Geneva, where he was attending a World Trade Organization meeting. "But I hardly see any criticisms of this in the media."

U.S. interest rates are at record lows near zero percent and the Federal Reserve has indicated it would not raise them for some time -- low rates cause a currency to weaken as investors pursue higher yields elsewhere.

Chen also noted that China's trade surplus was falling significantly after reaching $290 billion last year. He said imports were "growing very fast" even as exports have slowed considerably, and offered this as proof that China's exchange rate system wasn't unfairly distorting trade in its favor.

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