(Adds Chinese comment)
By Megha Rajagopalan and Patrick Temple-West
BEIJING/WASHINGTON, April 16 China rejected on
Wednesday a warning from the Obama administration that its
currency was too weak, urging the United States to recognise
that China aims to "perfect and regulate" the exchange rate
The Obama administration on Tuesday warned China that its
currency was too weak and expressed doubt over the Asian giant's
resolve to let market forces guide the value of the yuan.
In a semiannual report to Congress, the U.S. Treasury
stopped short of declaring China a currency manipulator, but
singled it out among large U.S. trading partners for its
"Recent developments in the ... exchange rate raise
particularly serious concerns if they presage a retreat from
China's announced policy of allowing the exchange rate to
reflect market forces," the Treasury said.
Chinese Foreign Ministry spokeswoman Hua Chunying said China
would continue with the "reform of its renminbi exchange rate
mechanism". The yuan is also known as the renminbi.
"We aim to perfect and regulate the exchange rate system,"
Hua said at a daily news briefing.
"We hope the U.S. can correctly recognise this and
appropriately deal with the relevant trade issues related to the
RMB exchange rate, and take a cooperative and constructive
attitude with the Chinese side, making unceasing shared efforts
to push forward the trade cooperation between China and the
The United States sees currency management by China and
other developing countries as an impediment to rebalancing the
global economy away from a situation in which rich nations
borrow heavily to buy goods from poor nations.
Emerging markets often build dollar reserves by keeping
their currencies weak to spur more exports, pushing developed
economies to borrow to cover their import bill.
GAINING AN EDGE?
The United States initially welcomed a move by China in
March to allow the yuan currency to vary more in value.
But in the month prior to China's trading band decision,
there were reports of "heavy intervention" by Chinese
authorities to keep the yuan's value low, the U.S. Treasury said
in its report.
Many U.S. lawmakers and firms have long complained that
China deliberately undervalues the yuan to gain an edge in
Some developing countries argue that America's easy-money
interest rate policies result in a flood of cash into their
markets, pushing them to build up dollar reserves to intervene
in their currencies and keep them stable.
In the report, the Treasury said currency interventions and
dollar reserve accumulation appeared to have increased globally
in the second half of 2013.
"Progress on rebalancing global demand continues to remain
inadequate and may, in fact, have worsened," the Treasury said.
While noting a rise last year in the value of the yuan, the
report said the increase was too slow and did not go far enough.
"Factors indicate a RMB exchange rate that remains significantly
undervalued," it said.
The turn lower in the yuan this year, however, drew
particular scrutiny in the report: "This suggests continued
actions to impede market determination."
As has become its custom, Washington called on the stronger
economies in Europe to do more to boost domestic demand so as to
lift the economic growth in the euro zone.
However, the Treasury did appear to soften its criticism
against Germany, dropping language from a prior report that
labeled Berlin's economic policy as having a deflationary impact
(Additional reporting by Jason Lange in Washington,; Editing by
Leslie Adler and Eric Walsh)