( Methinks this is nothing more than positioning by the pragmatic Obama. Truth is, any currency manipulation that the Chinese perform with the yuan in the next several months will probably be to stop it from depreciating as deleveraging and the accompanying liquidity sponge affecting emerging markets continues. China has a couple really tough quarters in front of her, the recent reports that loan growth is a bright spot fails to take into consideration that off balance sheet loans (black market) coming onto the books are 'goosing' the numbers . - AM)
Sun Jan 25, 2009 3:43pm GMT
By Ben Blanchard
BEIJING (Reuters) - Criticism that China is manipulating its currency is misplaced, unfair, unjust and being used an excuse for trade protectionism, a commentary by the official Xinhua news agency said on Sunday.
U.S. Treasury Secretary-designate Timothy Geithner said this week that Beijing was manipulating its currency exchange policies to gain an unfair trade advantage, comments already rebuked by China's central bank.
"These comments do not only not accord with reality, they are also a misinterpretation of the main reasons for the financial crisis, and will encourage the rise of trade protectionism in some Western countries," the commentary said, without directly naming the United States.
Such remarks about the Chinese yuan "divert international society's attention from current pressing global economic problems and are extremely unbeneficial to handling the financial crisis," Xinhua added.
The spat marks a testy start to ties between Beijing and the new administration of U.S. President Barack Obama, which may undermine promised cooperation in combating the global economic slowdown and security threats.
China worries that its already slowing exports will be even harder hit by U.S. policies to narrow their trade imbalance.