China’s Wen pledges ‘stable’ exchange rate

Premier Wen Jiabao has promised China’s struggling exporters a stable exchange rate in a move that might fuel tensions with Washington over Beijing’s currency controls as the global economy weakens.

BEIJING — Premier Wen Jiabao has promised China’s struggling exporters a stable exchange rate in a move that might fuel tensions with Washington over Beijing’s currency controls as the global economy weakens.

Wen’s pledge, reported by the official Xinhua News Agency and state radio, comes after the U.S. Senate approved a measure to allow higher tariffs on Chinese goods that critics say are unfairly cheap due to an artificially undervalued currency. Beijing’s exchange rate controls are especially sensitive at a time when other nations are trying to revive growth by boosting exports and complain that a weak Chinese yuan is widening the country’s swollen trade surplus.

Wen’s pledge Friday at a trade fair in southern China came after export growth suffered an unexpectedly steep decline in September, hurt by a fall in sales to Europe amid the continent’s debt crisis.

Wen promised a “basically stable exchange rate,” Xinhua said. He pledged to maintain export-related tax rebates and other support.

U.S. manufacturers complain the yuan is undervalued by up to 40 per cent, giving China’s exporters an unfair price advantage and wiping out American jobs.

— The Associated Press

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