US builds pressure on China over currency manipulation

Beijing: China responded Thursday to an accusation from the United States that it was artificially deflating the value of its currency by saying it would not bow to pressure from the United States to revalue its currency. US president Barack Obama had said Wednesday that he would like to ensure that China did not keep its currency at an artificially low level as it gave it an unfair advantage in exports.

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Speaking at a regular news conference here a Chinese foreign ministry spokesman said that ''wrongful accusations and pressure will not help solve this issue.''

He was responding to remarks made by president Obama in Washington on Wednesday at a meeting with Democratic senators.

The United States, Obama said, has ''to make sure our goods are not artificially inflated in price and their goods are not artificially deflated in price; that puts us at a huge competitive disadvantage.''

Economists are broadly agreed that the Chinese currency, the renminbi (RMB, also known as the yuan), is undervalued between 25-40 per cent against the dollar and other currencies. Under constant pressure from the preceding Bush administration the Chinese government decided to do away with the yuan's peg to the dollar and allow the currency to float in a narrow band against the dollar and other currencies in July 2005.

The effect was immediate with the renminbi appreciating 21 per cent.