Chinese President Hu Jintao told U.S. President Barack Obama that even a “large” appreciation of the yuan won’t solve the U.S. economy’s problems, and called instead for the U.S. to end limits on high-tech exports.
Hu, when meeting Obama in Seoul yesterday, reiterated China’s view that the yuan doesn’t cause the U.S. trade deficit and unemployment, according to a statement on the Foreign Ministry Website. The yuan’s effective exchange rate has gained 30 percent since the link to the dollar ended in 2005, he said.
China plans to “let the market play a greater role, improve the flexibility of the yuan exchange rate, and maintain a basic stability of the rate at reasonable and balanced levels,” Hu said.
China had its largest trade deficit since at least 1989 last month as Europe’s debt crisis damped exports. Premier Wen Jiabao has pledged to allow greater two-way movement in the yuan’s exchange rate.
Yi Gang, a deputy governor of the Chinese central bank, said March 25 at a forum hosted by the Caixin media group that the yuan’s appreciation will ease as China deepens changes to the exchange-rate mechanism, according to a transcript of his speech posted on the Caixin’s website.
Hu called on the U.S. to “take practical steps” to ease limits on exports of high-technology products to China to promote trade balance, according to the ministry’s statement. According to the statement, Obama said the U.S. is taking efforts to resolve the export-limit issue and he welcomes Chinese companies’ investment infrastructure and industries.
Hu expressed “worry” about North Korea’s satellite launch and the situation in the Korean Peninsula, according to the statement. He said he hopes that the U.S. and North Korea will continue talks, it said.
To contact Bloomberg News staff for this story: Victoria Ruan in Beijing at firstname.lastname@example.org; Regina Tan in Beijing at email@example.com
To contact the editor responsible for this story: Paul Panckhurst at firstname.lastname@example.org