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UPDATE 1-Senior Chinese diplomat rejects currency move

Published 03/17/2010, 06:30 AM
Updated 03/17/2010, 06:32 AM

* China rejects U.S. call for currency revaluation

* Says U.S. congress proposal not well founded

(recasts, adds details, background)

GENEVA, March 17 (Reuters) - A top Chinese diplomat on Wednesday dismissed U.S. lawmakers' calls for duties on Chinese exports if Beijing does not revalue the yuan, saying they were ill-founded.

"I don't think the call by over 100 congressmen from the U.S. is well founded on facts. They should not blame the problems they have by finding a scapegoat in China," He Yafei, China's new ambassador to the United Nations in Geneva, told a briefing.

Lawmakers introduced a bill in the U.S. Senate on Tuesday that would penalise some Chinese goods with extra duties if Beijing does not allow the yuan to rise. [ID:nN16248922]

He's comments on the issue reinforced a dismissal from Beijing that adjusting the yuan , would help resolve trade tensions. [ID:nBJB003740][ID:nTOE62G01Z]

He said a realignment of exchange rates would not solve trade problems, and China was in any case a robust market for other countries' goods.

"If the RMB (yuan) is the real issue nobody can figure out why we can have such a rosy picture for exports from major developing economies," He, formerly a vice-minister of foreign affairs and China's "sherpa" to the G20 summits, said.

He said U.S. exports had fallen by 17 percent globally last year, while exports to China had edged down by only 0.2 percent.

Similarly the European Union's exports had fallen 20.3 percent, while EU sales to China were down only 1.5 percent.

He said China had allowed the yuan to appreciate by 21 percent against the dollar since July 2005.

Many economists say this appreciation came to a stop in mid-2008 with the onset of the financial crisis. Dominique Strauss-Kahn, head of the IMF, said on Wednesday that the Chinese currency is undervalued. [ID:nBFA001088]

But He said that between July 2008 and February 2009, when many countries reacted to the crisis by devaluing, China had rejected the option of depreciation, and its real effective exchange rate had appreciated by 14.5 percent.

He said several developments had contributed to a deterioration in relations between the United States and China since late 2009, although ties on the whole had been good over the past 30 years, benefiting both countries and the world.

He cited President Barack Obama's meeting with the Dalai Lama and a U.S. decision to sell arms to Taiwan, as well as moves in congress over the yuan exchange rate as harming relations.

This deterioration was not China's fault and the United States must do its part to correct it, he said. (Reporting by Jonathan Lynn; Editing by Susan Fenton)

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