BEIJING (Reuters) - China should keep the yuan stable and not give in to U.S. pressure because a rapid rise in the value of the currency would harm the economy, a prominent government economist said on Monday.
Yi Xianrong, an economist at the Chinese Academy of Social Sciences, a top government think-tank, described U.S. legislation aimed at forcing China to speed up the rise of the yuan as “nonsense.”
He urged Beijing to find ways, such as drafting its own laws, to counter the U.S. legislation, which argues that China keeps the yuan artificially low to support its fast-growing economy.
“A rapid rise in the yuan exchange rate will harm China’s economy,” said Yi Xianrong, an economist at the Chinese Academy of Social Sciences, a top government think-tank.
“You cannot demand China let the yuan appreciate in the form of legislation, it’s total nonsense,” he told Reuters.
The U.S. House of Representatives is expected to vote on a bill this week that would let the United States apply duties on goods from countries with undervalued currencies.
The legislation reflects long-standing efforts by some U.S. lawmakers to punish Beijing for what they say is a policy of keeping the yuan undervalued against the dollar by at least 25 percent.
Earlier, China’s Vice Commerce Minister Chen Jian said the U.S. legislation was redundant and China would set its own course on the yuan.
“We’ll make a decision based on our own economic development levels and the world economic situation,” Chen said during a visit to Taiwan.
“If it takes the yuan to appreciate for our economy to develop, we will do it even though it would have negative impact,” he said. “But it is redundant for the U.S. congress to pass the proposal.”
Yi said China must fend off the U.S. pressure but at the same time press ahead with market-oriented reforms that, in time, will help determine the currency’s real value.
China should step up financial-market reforms and make the yuan an internationally accepted currency, moves that would help determine the yuan’s exchange rate.
“The best option is to keep the yuan stable as the global economy remains uncertain. A stable yuan will help reduce market speculation on yuan appreciation,” he said.
The yuan edged up to 6.6923 per dollar on Monday from 6.7079 the last time it traded on Tuesday, marking the ninth straight session of gains. The market was closed for most of last week to mark a national holiday.
Yi said the yuan had already gained around 23 percent against the dollar since its landmark revaluation in 2005 so the government must be cautious about allowing further gains.
The rise since the revaluation has already pushed many small, inefficient exporters in coastal areas to the wall, he said.
Editing by Neil Fullick