China tells G20 to keep its hands off the yuan

Fri Jun 18, 2010 12:07am EDT
 
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By Simon Rabinovitch and Aileen Wang

BEIJING (Reuters) - China told the rest of the world on Friday not to meddle with the way it manages the yuan, calling the exchange rate a sovereign matter for it alone to decide.

Beijing is under pressure from Washington in particular to let the yuan rise in value to help reduce the large U.S. trade deficit with China, and markets are expecting the issue to come up at next week's Group of 20 summit in Canada.

But senior officials brushed aside that idea.

"The RMB is China's currency, so I don't think it is an issue that should be discussed internationally," Cui Tiankai, a vice foreign minister who is China's G20 sherpa, the official in charge of preparing for the summit, told a news briefing.

China has kept the yuan, also known as the renminbi (RMB), steady around 6.83 per dollar for almost two years to help its exporters ride out the global financial crisis. Many Western economists believe it is undervalued by as much as 40 percent.

Zhang Tao, head of the central bank's international department, said that as far as he knew the yuan had never been discussed at previous G20 summits.

"The Chinese government will decide on its foreign exchange rate policy according to both domestic and global economic situations," Zhang said.

While the global economic recovery was unfolding more strongly than expected, the world economy was facing multiple uncertainties, Zhang said.   Continued...