The People's Bank of China, the country's central bank, disproved Saturday the allegations by a U.S. Treasury official that China is manipulating the exchange rates of its currency, saying the statement is untrue and misleading.
Su Ning, vice governor of the central bank, said that the allegation could sidetrack the effort to track the real cause of the financial crisis.
"President Obama -- backed by the conclusions of a broad range of economists -- believes that China is manipulating its currency," the U.S. Treasury Secretary-designate Timothy Geithner wrote to the Senate Finance Committee in documents released on Thursday.
"Also, we should avoid any excuse that might lead to the revitalization of trade protectionism. Because it will do no good to the fight against the crisis, nor will it help the healthy and stable development of the global economy," Su said.
Yi Xianrong, a researcher with the financial research center of the CASS, told Xinhua on Friday if the U.S. labeled China as a "currency manipulator", it would hurt the concerted action of fighting the global financial crisis.
It would also hamper the global efforts to shake off an economic slowdown as the Sino-U.S. economic tie had become one of the world's most important bilateral economic ties, Yi said.
According to China customs statistics, Sino-U.S. trade hit 333.74 billion U.S. dollars last year, up 10.5 percent year on year.
With a 9-percent rate, China contributed more than 20 percent of global economic growth in 2008, while the U.S. remained the world's largest economy, Yi said.
Geithner's comment was just aiming to try out the Chinese government's response, said Zuo Xiaolei, senior analyst with the Beijing-based Galaxy Securities.
Yuan appreciation and the pace of appreciation should not only be decided by trade surplus but also the status of domestic economic development, Zuo said.
"The price advantage of Chinese exports may not be a result of currency issues, but the country's lower costs of labor, resources and land," she said.
In July 2005, China abandoned a decade-old peg to the U.S. dollar and allowed its currency to appreciate by 2.1 percent. Since then, the yuan has strengthened further, rising more than 20 percent against the U.S. dollar.
(Xinhua News Agency January 24, 2009)