Economy

Snow: Let China decide on RMB

By Zhou Yan (China Daily)
Updated: 2010-04-10 09:04

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John Snow, former US Treasury Secretary, said it is up to Chinese leaders to decide the timing of any yuan revaluation, although he believes a gradual currency revaluation would be the best option for China. [YONG KAI / CHINA DAILY]

SHANGHAI - It won't be a surprise if the Chinese government soon shifts its currency policy in the light of mounting inflationary pressure in the nation, although it is up to China itself to decide the timing of any yuan revaluation, former US Treasury Secretary John Snow said on Friday.

"Over time, some continuing gradual movement in the yuan will be in China's interest; we're not pushing China, and the timing is certainly to be left to the Chinese leaders who have much better appreciation of those issues," Snow told China Daily on Friday at the Halter Financial Summit in Shanghai.

Snow made the comment amid growing speculation that China may soon resume yuan appreciation following US Treasury Secretary Timothy Geithner's visit to Beijing on Thursday. Details of his meeting with Vice-Premier Wang Qishan are unavailable, but it is widely speculated that he came to further press for yuan revaluation.

Commenting on Geithner's visit, Minister of Commerce Chen Deming said on Thursday that the US trade deficit with China, which is behind its consistent demand for yuan revaluation, is a result of its restrictive trade policies, not China's currency policy.

The market conditions and openness of an economy rather than the exchange rate policy have a major influence on which direction the trade balance swings, Chen said. China has long criticized the US for restricting high-tech exports to China, saying this contributes greatly to the US deficit with China.

Snow, who was US Treasury Secretary from 2003 to 2006, said a gradual revaluation of the yuan is the best option for China.

"A radical departure will be a mistake, and China has to be cautious of other competing considerations and then adjust it gradually," he said.

The yuan has appreciated 21 percent against the US dollar since July 2005, but has remained largely unchanged since July 2008 as the country tried every means to combat the global financial crisis.

The US government has decided to delay the release of a report on whether China manipulates its currency, a move that is seen as a signal of easing tension between the two sides.

It's the right decision to postpone the report, which gives China time to adjust its policy, Snow said. "It's wrong to name China as a manipulator," he said.

Premier Wen Jiabao said in March that the yuan is not undervalued, but senior officials have also said that the yuan has not risen against the dollar since the worsening of the global financial crisis in 2008 doesn't mean it won't change any more.

Snow also stressed that China will not face a decade-long stagnation like Japan had after the latter raised its currency dramatically in the 1980s under the pressure from the US and Europe.

He said China could sustain a growth rate ranging from 7 to 9 percent for a long period, given its vast amount of labor and natural resources and the growing strength of the private sector.