Experts: Pushing for yuan rise will not help US economy
Updated: 2011-11-15 07:56
By Zhang Yuwei (China Daily)
HONOLULU - When the appreciation of the Chinese yuan was raised at a panel discussion of the Asia-Pacific Economic Cooperation CEO Summit in Hawaii, business leaders had a simple message for politicians: Pressing China to appreciate its currency will only harm economic relations between the two largest economies in the world.
That general sentiment was in keeping with what Chinese President Hu Jintao told his US counterpart, President Barack Obama, at the summit.
During the meeting, Hu said the US' trade deficits, high unemployment rate and other economic troubles cannot be blamed on the Chinese renminbi's exchange rate. He said a sharp increase in the currency's value will do nothing to help the US overcome those difficulties.
Hu said China has acted responsibly in adopting its current exchange-rate policy and will continue to make reforms to its currency system.
At the CEO summit, which was attended by more than 600 CEOs, US and Chinese business leaders noted the US will hold a presidential election next year and said much of the talk about the yuan has been driven by politics.
Mitt Romney, a Republican candidate for president, has called China a "currency manipulator", saying that China has undervalued its currency and is taking away American jobs.
Many American business leaders have a different opinion.
Dennis Nally, chairman of the professional-services firm PricewaterhouseCoopers International, said politicians who regularly discuss the value of the yuan often neglect to ask an important question.
"What are the consequences of moving aggressively to deal with that currency issue?" he said. "That's part of the conversation that needs to be taken in total and that is just an isolation."
The renminbi has appreciated by 7 percent against the US dollar since June 2010 and by 30 percent since 2005. The US' trade deficit, or the difference between the value of its exports and its imports, meanwhile continues to rise.
In contrast to what some say, many experts argue the renminbi's appreciation will not lead to new jobs for the US but rather for Vietnam and other places where labor costs are low.
Captain Wei Jiafu, chairman of China Ocean Shipping Company Group one of the largest shipping companies in the world said the US made an "unreasonable request" by asking the Chinese to make the renminbi appreciate.
He noted that China has loaned the US large amounts of money through the purchase of US bonds. A sharp rise in the value of the renminbi, he said, would be unfair to China, because that would cause the debt to be repaid in dollars that are worth relatively less.
China, the US' largest creditor, holds $1.14 trillion in US treasuries bond, according to US Treasury Department data.
Wei said a sharp appreciation in the renminbi will hurt both Chinese and American businesses in China.
"It will hurt US companies in China because they will sell in devalued American dollars and spend appreciated renminbi," said Wei.
"If the renminbi appreciates fast, it will not only harm China's exports and cause more unemployment in China, but it will also harm the economic relations that exist between the two countries."
Wei, whose company has helped bring employment opportunities to 9,000 Americans since 2002, said US leaders should loosen the limits they have placed on exports of high-technology to China and invite more Chinese companies to invest in their country.
Wei said renminbi appreciation should be discussed in a reasonable way, without paying great attention to political matters. He said the approaching US presidential election is one of the reasons why the currency issue has drawn so much interest lately.
In October, the US Senate voted 63 to 35 in favor of a bill that, if made into law, will allow the government to impose duties on exports from countries that are found to be manipulating the value of their currencies.
Speaking at the summit, Thomas Donohue, president and CEO of the US Chamber of Commerce, said he holds opinions about the currency issues that are different from some that are found in Congress and the Obama Administration.
"There is no question that over time China has to resolve, and it is gradually, the balance of the value of its currency," Donohue said. "China's resolution of the currency issue should be evolutionary, not revolutionary, because China's fundamental interest is keeping hundreds of millions of people employed."
(China Daily 11/15/2011 page3)