The latest rhetorical salvoes underlined how long-running friction caused by the yuan’s de facto dollar peg could come to a head next month when US President Barack Obama’s administration decides whether to brand China as a “currency manipulator”.
People’s Bank of China Vice Governor Su Ning said the US should look to itself to boost exports and not cast blame on other countries, when asked to comment on remarks on Thursday by Obama, who called on China to move to a “more market-oriented exchange rate”.
“We always refuse to politicize the yuan exchange rate issue, and we never think that one country should ask another country for help in solving its own problems,” he said.
Obama’s rare comment about the currency comes as his administration mulls whether to use the “currency manipulator” label in a semi-annual Treasury Department report due on April 15, which could set in train punitive actions against China.
If China flinches, it may soon resume the yuan appreciation halted in mid-2008 to cushion the country from the global credit crunch. Speculation that Beijing could revalue its currency in the coming weeks briefly flattened the curve for offshore yuan forwards on Friday. But if China keeps the yuan locked in place, then scattered trade spats between the two giants could escalate into a full-fledged dispute, with Washington even considering across-the-board tariffs against Chinese products.
