China media reticent as yuan shot heard around world

By Ben Blanchard and Simon Rabinovitch

BEIJING (BestGrowthStock) – China’s announcement that it will resume currency reform made waves globally but caused barely a ripple in domestic media on Sunday, underscoring government sensitivity about a highly politicized economic issue.

Over the past few months, China and the United States have been engaged in a very public war of words about the value of the Chinese yuan, or renminbi, straining ties already burdened by spats over Tibet and U.S. arms sales to Taiwan.

Denunciations from U.S. politicians, who say China purposefully keeps the exchange rate low to unfairly boost exports, are met with equally strong words from Beijing and sometimes stridently nationalistic words in the Chinese press.

No such angry words from China yet, despite a feeling from some Chinese that their government has essentially given in to pressure from Washington ahead of the G20 summit in Toronto.

The People’s Daily, the main organ of the ruling Communist Party, put the news on its back page, while the banner headline on the website of the official Xinhua news agency was about torrential rain in southern China.

State television likewise concentrated on the rain storms, as well as the ongoing Shanghai World Expo.

Two days earlier, senior officials had stressed that China would not be bullied into resuming yuan appreciation.

Most websites blocked users from posting comments about the central bank’s statement, a measure normally reserved for only the most sensitive of news items.

On a few sites, however, readers were still free to make their views heard. They made clear that the government had its work cut out to win over public opinion.

“A shameless compromise!” wrote one online reader of the Global Times, a popular tabloid.

“If the economy takes a turn for the worse now, our descendants will curse you,” wrote another.

“The government move this time is totally to meet the needs of the United States as the U.S. has been very angry about the renminbi,” one blogger named Rising Sun said on popular Chinese portal tianya.cn.

“But it’s still to early to say whether China will actually revalue the yuan. Maybe this is just a move to fool the U.S.?” Rising Sun added.

Even some Chinese economists wondered if the move had any more than diplomatic meaning.

Yi Xianrong, an economist at the Chinese Academy of Social Sciences, a government think tank in Beijing, wrote on his blog that the central bank’s statement was “more about using diplomatic language” ahead of the G20.

“It does not have much substantive meaning when it comes to changes in the renminbi’s exchange rate,” he added.

But in fact it was probably far better to make the announcement now, when the country’s economy is bounding along again, than wait until after G20, said Duncan Innes-Ker, Beijing-based China analyst for the Economist Intelligence Unit.

“It would be even worse had they been planning to make this decision after the G20. That would make it look like ‘we’ve been criticized and now in a naughty schoolboy way we’re correcting our behavior afterwards’,” he said.

“By doing it beforehand at least they managed to avoid giving that impression.”

The Chinese media will unlikely stay quiet forever. The lack of articles, editorials and commentaries for the time being likely reflected a push by the government to get everyone on message about what could be a controversial policy change.

“For the common man, this is perhaps not such a good thing,” worried 27-year-old businessman Hu Wei on his way to a gym in Beijing, talking about the central bank’s decision.

“If the renminbi appreciates a lot, then that’ll affect our country’s exports. Also, now at home people’s desire for consumption isn’t that high yet, hence there will be an imbalance. Therefore this will most probably mean a period without much economic growth.”

Stock Market News

(Additional reporting by Huang Yan and Reuters Television; Editing by Benjamin Kang Lim)

China media reticent as yuan shot heard around world