China will have to re-value the yuan to help reduce trade frictions and ward off economic overheating, a state-run newspaper said on Friday, while the New York Times said the Politburo's standing committee is actively considering ending the currency's decade-old peg to the dollar. The pegged rate was the fundamental driving force behind China's wave of cheap exports and was also key to whether the authorities could prevent economic overheating, the China Securities Journal said.
"Chinese goods are getting cheaper and cheaper relatively. Chinese exports are growing strongly even as production costs are rising globally," the newspaper said in a front-page commentary.
"How can trade frictions not intensify?"
Beijing is under daily pressure from Washington in particular to let the yuan float higher.
China's trading partners complain that the peg unfairly undervalues the yuan by as much as 40 percent, fuelling a surge in exports of everything from shoes to steel.
European Trade Commissioner Peter Mandelson will hold talks in Shanghai on Friday with his Chinese counterpart, Bo Xilai, to try to negotiate voluntary curbs of Chinese textile exports.
Without a deal, the EU could soon follow the United States and impose growth ceilings on China's shipments, which have surged since the expiry of a global textile pact on January 1st.
The New York Times said the Politburo was considering steering the yuan's value in relation to a basket of currencies instead of just the dollar.
In a report from Hong Kong quoting current and former senior Chinese officials, the paper said the Politburo's nine-member standing committee was reviewing the basket peg option at almost daily meetings.
Comments
Comments are closed.