China tells US it is not manipulating currency

BEIJING (AFP) - China denied Friday that it was manipulating its currency, reacting to a statement by US President Barack Obama's Treasury Secretary-designate Timothy Geithner.
"The Chinese government has never used so-called currency manipulation to gain benefits in its international trade," the Chinese Commerce Ministry said in a statement faxed to AFP late Friday.
"Directing unsubstantiated criticism at China on the exchange rate issue will only help US protectionism and will not help towards a real solution to the issue," said the statement.
The statement from the Commerce Ministry was in response to a request from AFP for a reaction to statements made by Geithner released Thursday.
"President Obama - backed by the conclusions of a broad range of economists - believes that China is manipulating its currency," Geithner wrote to members of the Senate Finance Committee in written answers.
In its response, the Chinese Commerce Ministry promised to maintain a basically stable currency. "Even though the global crisis caused by the US subprime crisis has brought serious challenges to the development of China's economy and China's foreign trade, we nevertheless have emphasised many times that China will maintain the basic stability of the exchange rate," it said.
"We will not rely on depreciation to support exports." It added that "in a situation where the impact of the global financial crisis continues to spread, all nations should strengthen cooperation and coordination and face the challenges together".
Geithner said in his written statement Thursday that Obama "has pledged as President to use aggressively all the diplomatic avenues open to him to seek change in China's currency practices".
His remarks came in the same week that China announced that growth of its trade-dependent economy hit a seven-year low in 2008. China's economy, now the world's third-largest, expanded by 9pc last year, down steeply from 13pc in 2007, according to the National Bureau of Statistics.
China's exports fell 2.2pc in November, the first such drop in seven years, and the trend was extended into a second month with a 2.8pc decline in Dec, according to previous data from customs.
The Chinese government decided in mid-2005, after intense foreign pressure, to delink its currency, the yuan, from the dollar.
In the three years that followed, it rose about 20pc on the US dollar, muting some of the criticism that Chinese exporters were getting an unfair advantage from an artificially low currency.
However, for most of 2008 the yuan changed very little against the US currency, with some analysts speculating that Beijing was concerned about pushing key export enterprises out of business.