China's Hu says favors 'adaptive' exchange rate
SEATTLE, Apr 19 (Reuters) Chinese President Hu Jintao today said that China's goal was to increase the flexibility of the exchange rate between the yuan and the US dollar and to maintain an ''adaptive'' level.
China's goal was to maintain the yuan exchange rate ''basically stable at an adaptive and equilibrium level,'' Hu said in a speech on the second day of a five-day US visit.
''It serves the interest of China, the interest of the United States and common interests of all countries in Asia and the world at large,'' he said. He added that China's goal was to increase flexibility of the yuan exchange rate, but he did not explain what he meant by ''adaptive.'' Ahead of Hu's arrival in the US capital later in the day, congressional Democrats urged immediate action on a range of trade complaints. Hu acknowledged US concerns about China's trade surplus, which Washington says hit 2 billion in 2005.
Much of the surplus was an inevitable result of the two countries' ''differing industrial restructuring processes,'' Hu said through a translator. ''China does not seek a large trade surplus.'' About 90 per cent of the items China exports to the United States are not made in America anymore, he said. ''The United States would still have to import these products.'' Highlighting Chinese purchases of Boeing jets and farm products, including a .2 billion buying trip just days before his visit, Hu said: ''China has been increasing imports from the United States and worked hard to reduce the trade surplus.'' Democratic lawmakers urged President George W Bush to press Hu on a range of trade complaints, including China's currency policy.
''During the last five years, the US trade deficit with China has more than doubled, growing from 84 dollars in 2000 to 202 billion dollars in 2005. This trend is unacceptable and unsustainable,'' top Democrats on the House of Representatives Ways and Means Committee said in a letter ahead of Bush's meeting with Hu on Thursday at the White House.
But concrete action on the yuan is unlikely during Hu's visit said Albert Keidel, an expert on the Chinese economy at the Carnegie Endowment for International Peace in Washington, DC. ''The Chinese are certainly not persuaded by our concern that the exchange rate is undervalued and should appreciate,'' he told reporters.
REUTERS SC PM0233