Obama tells China: boost yuan or face consequences
Stephen Foley is a former Associate Business Editor of The Independent, based in New York. He left in August 2012. In a decade at the paper, he covered personal finance, the UK stock market and the pharmaceuticals industry, and had also been the Business section's share tipster. Between arriving with three suitcases in Manhattan in January 2006 and his departure, he witnessed and reported on a great economic boom turning spectacularly to bust. In March 2009, he was named Business and Finance Journalist of the Year at the British Press Awards.
Tuesday 15 November 2011
The US President, Barack Obama, has demanded that China revalue its currency upwards by 20 to 25 per cent, or face a loss of patience by the international community.
His words, at the Apec summit of Asia Pacific powers, represent another increase in the rhetoric against China, which the US accuses of holding the renminbi artificially low to benefit its exporters. As well as words, the summit promised deeds that could isolate China, as Mr Obama won tentative agreement for a free trade bloc that would include the US, Canada, Mexico, Japan and Australia, among other trans-Pacific countries.
The Obama administration has resisted intense domestic pressure to formally label China a "currency manipulator", a designation that could trigger sanctions and potentially a wider trade war. However, with all the possible Republican challengers to Mr Obama in next year's presidential election attacking China and with many Americans blaming Chinese competition in part for the sluggish US economy, Mr Obama went further than he has before in addressing the issue of the yuan.
"Most economists estimate that the renminbi is devalued by 20 to 25 per cent," he said. "That means our exports to China are that much more expensive and their imports into the United States are that much cheaper... When it comes to their economic practices, there are a range of things that they have done that disadvantage not just the United States but a whole host of their trading partners and countries in the region."
China said its president, Hu Jintao, had rejected the pressure in a meeting with Mr Obama. "Even if the yuan rises substantially, it will not solve problems faced by the United States," he said, according to the Chinese foreign ministry.
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