United States President Barack Obama scolded Chinese authorities over the alleged undervaluation of the Yuan, saying most economists estimated it was devalued by 20 to 25 per cent and that it was time for China to move towards a market-based system for their currency.
“The problem is, is that you've got a bunch of export producers in China who like the system as it is, and making changes are difficult for them politically. I get it. But the U.S. and other countries, I think understandably, feel that enough is enough,” said Mr. Obama.
“We are going to continue to be firm in insisting that they operate by the same rules that everybody else operates under. We do not want them taking advantage of the U.S. or U.S. businesses,” he said.
While the U.S. has made its concerns about the alleged undervaluation of the Yuan known for several years now, China has repeatedly suggested that the issue is a red herring and the U.S. economic woes stem from deeper, domestic causes relating to the downturn's impact.
The U.S. Senate last month passed a bill, the “Currency Exchange Rate Oversight Reform Act of 2011,” aimed at punishing China for allegedly manipulating its currency and holding it at an artificially low level.
The bill a day after it passed the Senate, saying it posed a “very severe risk” of starting a trade war between the world's two biggest economies.
Earlier this year Chinese President Hu Jintao said that U.S. monetary policy had “a major impact on global liquidity and capital flows and therefore, the liquidity of the U.S. dollar should be kept at a reasonable and stable level.” He deflected criticism away from China's currency, suggesting instead that efforts by the U.S. Federal Reserve to stimulate growth through huge bond purchases were fueling inflation in emerging economies.
Source: The Hindu
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