No quick yuan move despite easing rifts -China economist

BEIJING, April 5 (BestGrowthStock) – The U.S. decision to delay a
ruling on whether China manipulates its currency showed easing
tensions over the yuan, but it is too early for China to change
its currency policy, a government economist said on Monday.

“I believe this is a positive signal. At least the U.S.
side has created some room for further consultations and
negotiations,” said Huo Jianguo, head of the Commerce
Ministry’s think-thank.

“But I don’t think there will be a yuan adjustment in the
near-term. We need to to see whether China’s export recovery
will be sustained and need to see whether companies can cope
with a stronger yuan,” he told Reuters.

The ministry’s repeated warnings that many firms would be
ruined and millions of jobs lost if the yuan strengthened stand
in contrast to the central bank’s signals that it would welcome
a more flexible currency and its dampening effect on inflation.

Analysts believe, however, the two institutions will
eventually reach a compromise, possibly as soon as mid-2010.

U.S. Treasury Secretary Timothy Geithner said on Saturday
he was delaying an April 15 report on whether China manipulates
its currency but pledged to press for a more flexible yuan

The decision follows Thursday’s announcement that Chinese
President Hu Jintao will attend a nuclear security summit
meeting in Washington April 12-13 and seems to be a move to
keep tensions over currency in check. [ID:nTOE63100K]

Huo said many Chinese exporters oppose a stronger currency
out of fear that their thin profit margins could be wiped out.

Any yuan policy change would ultimately depend on China’s
own economic interests, although the impact on other countries
would also be taken into account, he said.

China’s exports jumped 45.7 percent in February from a year
earlier but the growth may have been exaggerated by the low
base, while imports were growing at a faster clip due to robust
domestic, slashing the trade surplus, he said.

Huo echoed recent official forecasts that that China could
post a small trade deficit in March, the first since 2004.

“This may help ease upward pressure on the yuan. We need to
watch whether the trade deficit is short-lived or it’s a
turning point,” Huo said.
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(Reporting by Kevin Yao; Editing by Tomasz Janowski)

No quick yuan move despite easing rifts -China economist