China: Stronger yuan alone won't end US job woes

Updated: 2011-11-19 20:22


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NEW YORK - The yuan exchange rate did not cause the trade imbalance between China and the United States, and its appreciation alone would not end high US unemployment, Chinese Ambassador to the US Zhang Yesui said here Friday night.

Zhang was speaking before a group of Chinese and US business leaders at an event to celebrate the 6th anniversary of the China General Chamber of Commerce-USA.

"The trade imbalance is caused by a combination of factors, including the structural trade and investment differences, divergent patterns of saving and consumption, and the international division of labor, rather than an issue of the RMB (yuan) exchange rate," he said.

He said it was important to note that, despite the yuan's nearly 30 percent appreciation since July 2005, US unemployment rates had increased from 5.1 percent in 2005 to 9 percent now.

"This proves that RMB appreciation alone will not help to reduce the unemployment rate in the US," he said.

Zhang reaffirmed that China would continue to progressively promote the reform of the RMB exchange rate regime and make the exchange rate more flexible in a self-initiated, gradual and controllable manner.

He said China's trade with the rest of the world was moving toward greater balance, with a declining trade surplus on a yearly and even monthly basis.

Official data showed China's imports grew 5 percentage points higher than exports in the first 10 months this year, and the trade surplus was down sharply by 16 percent in the same period, with the trade surplus accounting for less than 1.4 percent of total gross domestic product (GDP), he said.

"In general, China's trade is basically balanced, and China's balance of international payments is within a reasonable range," Zhang said.

Against the background of low economic growth and high unemployment rates, the US Senate passed a currency bill targeted mainly at China.

Zhang said he did not think legislation was the appropriate mechanism by which to address the currency issue, because to invoke protectionist measures would only push China and the US to the brink of a "trade war."

A trade war, he stressed, was exactly what should be avoided at a time of sluggish world economic growth and international financial instability.

Zhang highly valued the China-US relationship, saying it was not and should not be a zero-sum-game relationship. He called for a true partnership which would not only benefit the two countries but also the world.