BEIJING (AP) -- China on Thursday rejected the latest U.S. accusation that its currency is undervalued, saying a stronger yuan will not ease America's yawning trade deficit as officials prepared to face off on the issue at the G-20 summit in Canada this weekend.
Ahead of the summit that brings together the biggest rich and developing economies, U.S. Commerce Secretary Gary Locke told a Senate Finance Committee that the weak Chinese yuan continues to hurt American exports despite China's announcement it would loosen its controls on the currency.
Locke at Wednesday's hearing said President Barack Obama will raise currency and other trade issues in talks with Chinese officials, including President Hu Jintao, at the G-20 gathering.
His comments continue the drumbeat of criticism from China's trading partners about the value of the yuan, frustrating Beijing efforts to take the heat out of the issue by announcing Saturday it would loosen the currency's peg to the dollar. The change in stance could result in a stronger Chinese renminbi, as the yuan is also known, over time.
"I would like to stress the renminbi exchange issue is not the cause of the trade imbalance between China and the United States," Foreign Ministry spokesman Qin Gang told a regular news conference Thursday.
Reiterating points often made by Beijing, Qin said globalization of production was one reason for the trade imbalance, along with U.S. restrictions on high-tech exports to China.
"We believe the appreciation of the renminbi cannot bring about balanced trade and cannot help the U.S. solve its own problems of unemployment, over-consumption and a low savings rate," Qin said.
Some U.S. lawmakers have pushed for Obama to have China declared a currency manipulator, a designation that could lead to trade sanctions. The Treasury Department postponed issuing a report to Congress due in April that could have put the manipulator label on Beijing.
Beijing has steadily denied accusations the yuan is unfairly undervalued. But after Saturday's announcement of more flexibility, the yuan has been close to the same range as it was last week, weakening Thursday to 6.8113 to the U.S. dollar from Wednesday's close of 6.8105.
In place of the dollar peg, the central bank has resumed its practice of setting the yuan's exchange rate against a basket of currencies, including the dollar. After that system was set up in 2005, the yuan gained nearly 20 percent against the dollar, until Beijing halted its rise two years ago to help protect its exporters from the global downturn.
Beijing has ruled out any major revaluation for the yuan, saying the currency is at about the right level. Pressures on the yuan are generally upward: Because China usually runs huge trade surpluses, the central bank buys up excess foreign exchange and sells the yuan to keep the yuan's value steady.
Economists say they expect the yuan to gain at most only a few percent against the dollar this year. That slow pace of change will likely frustrate many critics of China's currency policies, including U.S. lawmakers who have complained for years that China undervalues its currency to make its exports cheaper, thus driving up the cost of American exports and adding to the U.S. trade deficit.
On Wednesday, several senators questioned whether China was serious about letting value of the yuan appreciate by more than a token amount.
"The only purpose (of the announcement) is to fend off pressure," said Democratic Sen. Chuck Schumer, a leader of the campaign to raise the value of the yuan. "It's the same pattern we have seen for years," he said.