18:38 21Mar10 RTRS-WRAPUP 2-China vows to hit back if targeted by U.S. on yuan
    * U.S. overstates China's trade surplus, commerce chief says
   * Chinese trade could swing into deficit in March
   * Says yuan is not undervalued
(Adds comments from ADB president and vice finance minister)
   By Langi Chiang and Ken Wills
    BEIJING, March 21 (Reuters) - Beijing will retaliate if the
United States declares China a currency manipulator and imposes
trade sanctions, Commerce Minister Chen Deming said on Sunday,
firing the latest salvo in a spat over the value of the yuan.
   Chen again accused Washington of politicising the issue
ahead of an April 15 deadline for the U.S. Treasury to rule
whether China is unfairly holding down its exchange rate to gain
a competitive edge in global markets.
   "The currency is a sovereign issue and should not be an
issue to be discussed between two countries," Chen told the
China Development Forum.
   "We think the renminbi is not undervalued, but if the U.S.
Treasury gave an untrue reply for its own needs, we will wait
and see. If such a reply is followed by trade sanctions, I think
we will not do nothing. We will also respond if this means
litigation under the global legal framework," hea added.
   Chen did not specify how Beijing might respond.
>^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^  - For a factbox on currency manipulation [ID:nN16106007])
- For a graph on China's trade surplus and the yuan, click on:
http://link.reuters.com/vus34j - COLUMN: Be careful what you
wish for on currencies; John Kemp [ID:nLDE62H1GF]
- For an Insider TV clip, see: http://link.reuters.com/xuv34j -
For more, see [ID:nCHINA]
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>     Political pressure is growing in Washington to declare China
a currency manipulator, with some U.S. senators threatening to
slap duties on Chinese products if Beijing does not allow the
yuan, also known as the renminbi, to rise.
   The head of the Asian Development Bank (ADB) on Sunday
joined the chorus of calls for Beijing to abandon the peg of
6.83 yuan to the dollar imposed in mid-2008 to help China's
exporters weather the global financial crisis.
   In the three years before that, Beijing had let the yuan
<CNY=CFXS> climb 21 percent against the dollar.
   "Greater flexibility in the exchange rate of the yuan would
be in the interests of the Chinese economy. Rebalancing is a big
challenge and exchange-rate flexibility could contribute to
making that process smoother over the years to come," ADB
President Haruhiko Kuroda told Reuters.
   While it was wrong to rely exclusively on the exchange rate
to tilt the economy away from exports and towards consumption, a
freer-floating yuan would also strengthen Beijing's control over
monetary policy, Kuroda said on the sidelines of the forum.
   "When and how should be decided by the Chinese authorities,"
he said of the switch back to a more flexible currency regime.
   The International Monetary Fund and the World Bank both
urged China last week to let the yuan resume its ascent.
   Some U.S. legislators and think-tanks say the Chinese
currency is undervalued by as much as 40 percent, causing
imbalances in bilateral and global trade flows.
   TRADE SURPLUS 'OVERESTIMATED'
   But Chen accused Washington of overestimating the size of
China's trade surplus with the United States, putting more
pressure on the relationship between the world's biggest and
third-biggest economies.
   The defiant comments stood in contrast to a ministry
statement on Friday that was widely interpreted as an attempt to
bridge differences.
   The ministry said then that it would send a vice minister to
Washington this week to try to ease trade frictions, although it
specifically noted that China's currency policy was off-limits.
[ID:nTOE621026]
   Speaking on Sunday, Chen said any adjustment to the yuan's
value would not by itself resolve global trade imbalances.
   China's trade surplus increased while the yuan was gradually
appreciating from 2005 to 2008, yet the surplus fell 34 percent
last year even though the yuan marked time against the dollar.
Chinese trade could even lurch into the red this month.
   "A country's currency appreciation is very limited in
helping to rebalance global trade," he said. "I personally
expect that China could possibly have a trade deficit in March."
   Chen called on all countries to oppose any form of trade
protectionism, a theme that echoed an earlier speech by Vice
Premier Li Keqiang. Neither official mentioned specific
countries.
   Vice Minister of Finance Wang Jun, also speaking at the
forum, said it was not time yet to talk about exiting the
economic stimulus programme but added "we should actively study
the exit strategy together" with other countries.
(Additional reporting by Alan Wheatley; Editing by Jeremy
Laurence and Hans Peters)
   ((Reuters Messaging,
ken.wills.thomsonreuters.com@reuters.net; +8610 6627-1288))
Keywords: CHINA USA/  
   

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Sunday, 21 March 2010 18:38:31
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