Center

Council against forced appreciation of Renminbi

(Xinhua)
Updated: 2006-09-12 10:19

The US-China Business Council, a federation of U.S. corporations engaged in business relations with China, said on Monday that it opposes attempts to force the Renminbi yuan to appreciate.

John Frisbie, president of the council, made the remarks in an exclusive interview with Xinhua at the ongoing China Business Summit.

He said the exchange rate of the yuan is only one of the reasons behind China's huge trade surplus against the United States.

The trade imbalance can only be solved through dialogue and the reform of the Renminbi exchange rate must be a gradual process, said Frisbie.

The United States has blamed the low exchange rate of the yuan against U.S. dollars for its expanding deficit with China, which according to the Chinese customs authority, reached a new monthly high of 18.8 billion dollars in August.

The deficit in the first eight months of the year totaled 94.65 billion dollars (according to Chinese figures), fueling calls for action from inside the United States.

U.S. senators Charles Schumer and Lindsey Graham have said that they will push for a vote by the end of September on their legislation to impose 27.5 percent penalty tariffs on Chinese imports unless China moves to allow a greater appreciation of the yuan.

Frisbie said he is unsure whether or not the Senate will eventually vote on the proposed bill, or whether it will be adopted if it does.

But he said he is sure of at least one thing - the United States and China share the same goal of having a market-based free floating regime for the Renminbi.

Stephen Roach, chief economist of the leading U.S. investment bank Morgan Stanley, has said that an appreciation of the yuan will not help the United States to cut its deficit.

Insufficient domestic savings and excessive consumption, not the exchange rate of yuan, are the fundamental reasons for the rising deficit, he said.