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Strategies & Market Trends : China Warehouse- More Than Crockery -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (3526)	10/1/2004 6:30:40 PM
From: RealMuLan	Read Replies (1) \| Respond to of 6370

US pressure on China's currency called political Tue Sep 28, 2004 06:54 PM ET WASHINGTON, Sept 28 (Reuters) - There is no good economic reason for China to revalue its currency even though the United States voices displeasure with China's exchange rate policy, a former U.S. Treasury official said on Tuesday. Albert Keidel, who until recently was deputy director of the Treasury Department's office of East Asian nations, said presidential campaign politics, not good economics, were behind U.S. efforts to force China to adopt a more flexible exchange rate. "Both parties are politicizing the issue out of fear that if they don't, (if) they're seen as being soft on China ... it will lose them the election," Keidel said at a discussion on China's efforts to keep its economy from overheating. Laurence Meyer, a former member of the Federal Reserve board of governors, said he agreed. Asked what he would do if he was governor of China's central bank, Meyer said: "The first thing I would do is not encourage any change in the exchange rate regime ... I'd take that off the table right now." China has kept its currency pegged at about 8.28 dollar since 1994. Any move by China to adjust its currency would be risky because of the difficulty of getting it right, Meyer said. "It's dangerous if it's too little because it generates speculation. It's dangerous if it's too large because then you might over adjust in terms of the economy," he said. As evidence that the currency peg gives Chinese companies an unfair advantage, U.S. manufacturers and labor groups point to the United States' trade deficit with China, which hit a record $125 billion in 2003. The National Association of Manufacturers expects the trade gap to surpass $150 billion this year. Keidel noted, however, that China runs a large deficit with with the rest of the world which reduces its overall trade surplus to roughly 2 percent of its gross domestic product. "That is not evidence of any manipulative relationship or unfair trade advantage," he said. "China's import growth is as fast as its export growth. This is a clear win-win situation in the world economy." © Reuters 2004. All Rights Reserved. reuters.com