China's Wen: Won't yield on yuan

[notiCIas]

China's Wen: Won't yield on yuan

Premier says pressure won't rush currency flexibility, force textile import changes.

May 16, 2005: 9:08 AM EDT

BEIJING (Reuters) - Premier Wen Jiabao told visiting U.S. businessmen Monday that reform of the yuan's fixed exchange rate was a sovereign affair for China and that Beijing would not bow to foreign and speculative pressure to let the currency rise.

In remarks relayed by the official Xinhua news agency, Wen said China would continue pursuing its stated goal of a more flexible yuan, also known as the renminbi, as conditions permitted.

But politicizing economic issues would not help the cause of those clamoring for change, he said.

Wen appeared to have in mind a row over surging Chinese textile exports, because he criticized Washington's recent move to impose curbs on imports of Chinese trousers, shirts and underwear.

Chinese textile sales to the United States and Europe have surged since a decade-old system of quotas on developing countries' exports expired Jan. 1.

Temporary limits are permitted under global trade rules, but Wen said the U.S. curbs were not conducive to healthy bilateral trade relations.

"Currently there are some problems in Sino-U.S. trade. The problems should not be politicized," Xinhua quoted him as saying.

"Reform of the renminbi's exchange rate is a matter of China's own sovereignty," Xinhua quoted Wen as saying. "Any pressure or media play-up, or politicizing an economic matter, will not help solve problems," he told a U.S. Chamber of Commerce delegation.

The United States ran a $162 billion trade deficit with China last year, reinforcing the view of U.S. officials and some academics that China is keeping the yuan unfairly cheap to give its exporters an extra competitive edge.

China has been busy preparing the ground to introduce more flexibility in the exchange rate but has repeatedly said it will move at its own pace.

"China will not act rashly if conditions do not permit, despite strong pressure from outside," Wen was quoted as saying.