Yuan rise would erode China’s reserves: researcher

BEIJING (BestGrowthStock) – China has been defensive about letting the yuan rise partly because it would erode the value of the country’s $2.4 trillion of foreign exchange reserves, a foreign affairs researcher said on Thursday.

The comments by Yang Jiemian, brother of Chinese foreign minister Yang Jiechi, are representative of one school of thought in Beijing about how a sharp rise in the yuan would hurt China’s own interests.

“Our reserves are accumulated at the price of our sweat and blood, environment and hard labor, but the so-called exchange rate issue may cause us to lose these fruits,” said Yang, president of the Shanghai Institute for International Studies.

“Of course we have to be firmer than before on this issue,” he told a regular forum sponsored by China Center for International Economic Exchanges, a newly created think-tank under China’s planning agency.

Yang listed the exchange rate, along with Taiwan and Tibet, as issues that matter to China’s “core interests.”

U.S. Treasury Secretary Timothy Geithner said this week at talks in Beijing that whether to reform the yuan was China’s own choice. Chinese President Hu Jintao said that the government would continue to reform the yuan exchange rate formation mechanism.

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(Reporting by Zhou Xin; Editing by Ken Wills)

Yuan rise would erode China’s reserves: researcher