Yuan is at appropriate level: Premiere

Yuan is at appropriate level: Premiere

NUSA DUA, Indonesia: China will not let its currency float
freely until further financial reforms are in place, Premier Wen
Jiabao said on Tuesday.

"To keep the renminbi (yuan) stable at an appropriate and
balanced level is conducive to the economic stability and
development not only of China but also of the region and the
world at large," Wen told a business conference on the sidelines
of a regional summit here in Bali.

The U.S. administration is turning up the heat on China to
abandon the yuan-dollar peg, which it blames for shutting out
U.S. exports and destroying American jobs.

Wen said, however, that Chinese exports make up just five
percent of the world's total and Chinese products were
competitive because of "our rich labor resources."

More than half China's exports are made by companies which
have foreign investment, he added.

Hard-hit U.S. manufacturers complain the yuan is vastly
undervalued at a pegged rate of 8.28 to the dollar, making U.S.
goods too expensive for Chinese markets and Chinese exports cheap
in U.S. markets.

The U.S. trade deficit with China grew 13 percent in July from
the previous month to US$11.3 billion. The U.S. deficit with
China last year was a staggering $103 billion.

Treasury Secretary John Snow failed to convince China to break
the yuan-dollar peg when he visited Beijing last month.

During Snow's visit, the Chinese said they would move to a
flexible exchange rate as they steadily reformed the economy.

"The Chinese government has all along taken a prudent and
responsible approach to the exchange rate of the renminbi. The
current unitary and managed floating exchange rate regime based
on market demand and supply is in line with China's reality," Wen
said.

"It also shows that China has a high sense of responsibility
towards the international community.

"In the cause of further financial reform, China will seek an
appropriate renminbi exchange rate regime and improve the
currency regime according to its economic development level,
economic situation and balance of international payments," Wen
said.
--AFP