China Warns Yuan Push Is Stifling
BEIJING -- Chinese central bank chief Zhou Xiaochuan warned that mounting political pressure on Beijing to revalue its currency, and overblown expectations about how such a move may help correct imbalances in the world economy, are making it more difficult for China to take action.</br></br>His U.S. counterpart, Federal Reserve Chairman Alan Greenspan, said he is confident Beijing would make a move "reasonably soon," since it was in China's own best interests. The two bank officials were speaking to a gathering of world bankers yesterday in Beijing.</br></br>China has come under increasing pressure from its trade partners to revalue the yuan. U.S. and European manufacturers complain that an overly cheap yuan gives Chinese companies an unfair advantage by making their exports more competitive. The White House is trying to stave off growing protectionist pressure in Congress by pushing China for a substantial appreciation of the yuan, which is pegged at 8.28 to the dollar. The U.S. Treasury has said China risks trade sanctions unless it eases the peg within six months.</br></br>Mr. Zhou, an English-speaking technocrat, is widely believed to advocate a more flexible currency and greater use of other market mechanisms, such as interest rates, to iron out the boom-bust cycles that plague the Chinese economy. Some Chinese officials fear that if Beijing abandons the peg, it would be pulling up an anchor that has held the economy steady for more than a decade.</br></br>Yesterday, Mr. Zhou touched on some of those concerns, telling bankers that China is concerned about how any yuan appreciation could affect domestic jobs and growth. While China remains committed to currency overhauls, he said, China's banks need more time to prepare.