United States Treasury Secretary Timothy Geithner is visiting the Chinese Vice Premier Wang Qishan in Beijing this week to discuss China’s policy on keeping its currency (the yuan) at a fixed exchange rate. Just a few days back, Washington delayed a report to Congress on foreign exchange rates well past the April 15th deadline a possible signal that relations are becoming more cordial.
From 2005 to 2008, China’s central bank appreciated the yuan by 20% against the dollar. Recently, China re-pegged the Renminbi at 6.827; the strongest in a year. But it has yet to be revalued since the onset of the financial crisis, perhaps in order to protect exporters. According to most economists, the yuan is somewhere between 20% and 40% undervalued.
According to a White House representative, President Obama will also raise the currency issue with President Hu Jintao at the nuclear security summit meetings in Washington DC next week.
China’s economic policy department- the National Development and Reform Commission (NDRC) said that they would keep a check on exchange rates and that Beijing is moving towards a more ‘flexible yuan’. In a meeting in India last week, Geithner said that the yuan would take a broader international role, calling that a "healthy, necessary adjustment."
China hints at readiness to let Yuan rise [ Reuters, 7 April 2010]
Geithner plans China side trip [ CNN, 7 April 2010]
Geithner to visit China, in Sign of Warming Relations [ The New York Times, 7 April 2010]