China gets support from ASEAN over currency

China gets support from ASEAN over currency

Agence France-Presse, Manila

Southeast Asian finance ministers on Thursday defended China's refusal to revalue the yuan despite growing international pressure for Beijing to change the unit's peg to a declining U.S dollar.

The Chinese currency has been effectively pegged to the dollar since 1994, boosting Chinese exporters' competitiveness as a result of the decline on the U.S currency.

The value of the yuan was among the topics raised at annual talks of the Association of Southeast Asian Nations (ASEAN) finance ministers in Manila on Thursday although it was not on the official agenda, sources said.

"Our position is we respect China's position and we encourage what it is already doing because China is evolving also," Philippine Finance Secretary Jose Isidro Camacho, the meeting's chairman, told reporters.

The yuan issue is also expected to be raised at a separate meeting on Thursday between the ASEAN ministers and their counterparts from Japan, China and South Korea under the "ASEAN plus three" dialogue foimat.

Japanese Finance Minister Masajuro Shiokawa said on the sidelines of the meeting here that he would raise the issue. South Korea has also expressed concern over the yuan, which some analysts said is seriously undervalued.

Asked to comment on the perceived differences in views between Southeast Asia and its Northeast Asian neighbors over the value of the yuan, Camacho said: "It is the Western countries that are creating the impression."

Some Southeast Asian countries compete head on with Chinese in exports although China in recent years have been gradually importing more goods from this region.

ASEAN comprises Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

Like the yuan, the Malaysian ringgit is also pegged to the U.S dollar. Most of the other Southeast Asian currencies, including the Singapore dollar, have been allowed to weaken against the dollar in recent months so as to keep pace with the downturn in the U.S unit.

Analysts estimate that the yuan, fixed at a rate of about 8.3 to the dollar, is undervalued by at least 15 percent or even more.

The United States and Europe have also expressed concern over the yuan.

U.S exporters have complained that the undervalued yuan makes their goods too expensive for Chinese markets and simultaneously makes Chinese exports unfairly cheap in U.S markets.

Some U.S senators had complained that China deliberately keeps the yuan undervalued to boost exports at a heavy cost to U.S industry.

For his part, European Union Trade Commissioner Pascal Lamyis said recently there was no rational reason for it to be pegged to the dollar, arguing in favor of a peg to a basket of currencies instead.

The Chinese government says it wants to maintain the stability of the yuan but had not ruled out making adjustments in the future.

China's top priority when deciding the value of its currency is its own economic situation, while the interests of the outside world come next, China's Commerce Minister Lu Fuyuan has said.