China said Friday the yuan exchange rate must not be used as a "scapegoat" for the United States' economic woes, ahead of a Treasury Department report that could label the country a currency manipulator. "The United States can't use domestic reasons to pass on its domestic employment and economic growth problems (to other nations)," commerce ministry spokesman Yao Jian told reporters.
"The yuan's rate must not be the scapegoat of US domestic problems." Earlier Friday, China set the yuan at its strongest level since policymakers pledged in June to loosen their grip on the currency. The People's Bank of China set the yuan central parity rate - the middle of the currency's allowed trading band - at 6.6497 to the dollar.
The Chinese unit has gained nearly 0.5 percent this week and more than 2.6 percent since the summer as US and European lawmakers stepped up calls for a faster appreciation in the currency, which they say is grossly undervalued. The US Treasury Department's twice-yearly report on the currency practices of China and other countries is expected to be released later Friday.
Beijing has previously allowed the yuan to strengthen slightly ahead of events at which it expects to come under pressure over the value of its currency, which critics say gives China an unfair trade advantage. China has consistently rejected any pressure for a fast rise in the yuan, even as it lets it strengthen gradually.
Yao said US impatience with the yuan was part of an American strategy aimed at taking "discriminatory trade measures against Chinese products." "Such actions will severely violate WTO rules and will be unreasonable and wrong," he told reporters at a regular briefing. The House of Representatives last month passed a bill urging the US government to consider Beijing's currency policy as an improper trade subsidy and expand the powers of the Commerce Department by allowing it to slap retaliatory tariffs on Chinese goods. The US Senate has signalled it will take up a companion bill after the November elections. Pressure on Beijing is unlikely to ease after the politically sensitive US trade deficit with China expanded eight percent to 28.0 billion dollars in August, wiping out the previous record of 27.9 billion dollars in October 2008.
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