Hu Jintao: U.S. Economy's Woes Wont Be Cured By Major Yuan Rise

BEIJING (Reuters) - U.S. trade and employment problems would not be solved by even a major appreciation of China's yuan versus the dollar, Chinese President Hu Jintao was quoted as saying on Sunday.

"The trade deficit and unemployment problems are not caused by the yuan exchange rate. Even a major appreciation of the yuan would not resolve the problems facing the United States," Hu was quoted as saying on Chinanews.com.

Chinanews said Hu made the comments when he met U.S. President Barack Obama at the Asia Pacific Economic Cooperation (APEC) group summit in Hawaii.

A subsequent statement on the website of China's Foreign Ministry carried the same comment.

Hu's comments follow those of China's Commerce Minister Chen Deming, who said at the recent G20 summit in Cannes that the yuan was at a reasonable level versus the dollar and was not the root cause of U.S. economic imbalances.

China's yuan currency -- also known as the renminbi -- has gained about 40 percent in real effective exchange terms since Beijing abandoned its peg to the U.S. dollar in 2005.

The yuan has rallied almost four percent against the dollar in nominal terms this year.

Hu also called on Washington to relax restrictions on high-tech exports to China and make it easier for Chinese firms to invest in the United States.

Officials in Beijing say that a quick way for the U.S. to cut its trade deficit with the world's second largest economy would be through lifting curbs on high-tech exports Washington considers sensitive.

Hu made a similar point at a meeting with U.S. business leaders on the sidelines of the APEC summit on Thursday.

The leaders of the world's two biggest economies also spoke about Iran and North Korea, the Chinese foreign ministry said on its website. It said Hu and Obama "exchanged views", but gave no details.

(Reporting by Chris Buckley and Judy Hua; Editing by Nick Edwards and Robert Birsel)

Copyright 2011 Thomson Reuters. Click for Restrictions.

Comments

[aacme]

07:55 PM on 11/14/2011

He's right. The problem is that everything we buy is made in China. If not, who would care what the yuan trades for?

[uniquindividual]

06:33 PM on 11/14/2011

Jintao is partially right.

The lack of fredoms associated with speech, association, assembly, religion and political choice all have at least as great an impact on the trade issue with China.

American workers are forced to compete with a totalitarin society right from an Orwell novel.

30 years ago trading with a repressive communist country was considered treason, then ten years ago everything changed.

Why?

The 1% saw their opening.

[ADVOCATE4ZPG]

08:47 PM on 11/14/2011

MFNTS granted under Carter(?) or Reagan?

[Martin Privat]

09:36 PM on 11/14/2011

Even Carter bowed his head to the Gods of Commerce. So did Clinton when he renewed it. Does not mean it is any less destructive to American Manufacturing jobs. Blame can be spread far and wide. What we need is solutions.

[uniquindividual]

06:36 PM on 11/15/2011

Trade policy began to change radically under Reagan, but the blame is bipartisan - A minority of democratic politicians have been against it from the get-go, but just a minority. (Republicans were all in of course)

[teltech543]

01:26 PM on 11/14/2011

China is not the problem. The problem is importing so much stuff from China. Look in a Wal-Mart and check out where everything is made. Most comes from China, Mexico, Thailand and Korea. So all our money goes over there. Then we give money away for free to countries that are impoverished, had weather problems or just want money because we are an easy tap. Then we spend billions on wars over there. Leaving billions of equipment and goods behind. We waste billions on "terrorism". It has been what? 10 years? Get over it. Disband homeland security. It is like Unions. They are no longer required. Why keep beating a dead horse? Government MUST change. If it doesn't then we must go the way of Libya, Syria, Italy, Greece and take the country back from those who are destroying it and let America return to the people.

[ProudLiberalDemocrat]

04:37 PM on 11/14/2011

But if the value of the Chinese currency were to rise, then the result would be a fall in U.S. $dollar value.

A lower $dollar would stop the advantage of importing from China and encourage more 'Made in America' products.

While these changes would not occur overnight, I believe that Chinese President Hu Jintao misses the point: America's economic woes are not the fault of a manipulated Chinese currency, but this would be a good start toward rebalancing our trade.

Also, if the Chinese played fair and did not steal intellectual property, then this too would help rebalance trade deficits.

In other words, it's not just currency, but the totality of Chinese policies that have harmed America and the prosperity of many developed nations.

[ruolivert]

05:20 PM on 11/14/2011

The dollar has lost almost $90 of its value since 1913, how much lower do you suggest it go? China manipulates its currency to combat our own currency manipulation.

[ADVOCATE4ZPG]

09:06 PM on 11/14/2011

China (the PRC alone!!!) enjoys a $274 BILLION trade SURPLUS with the U.S. in one years along and has enjoyed a positive balance for the better part of 30 years.....

It's time TO THROW SOME COUNTER PUNCHES and rebuilt what left of U.S. manufacturing.....

If insisting on upwardly revaluing the RENMINBI is not the only answer, it is an ESSENTIAL first step.....

China has been PANDERED to TOO LONG, and whether it's middle class grows or prospers SHOULD NOT be at the expense of Western workers!!!!

[Opinionated Lady]

10:56 AM on 11/14/2011

"Hu also called on Washington to relax restrictions on high-tech exports to China and make it easier for Chinese firms to invest in the United States."

Translation: Your companies are moving your jobs here and we are stealing your intellectual property like mad. Might as well see the writing on the wall, with your corrupt politicians and pretend gridlock over social and economic issues, might as well end the game quickly as it's sure to be up sooner or later.

[ADVOCATE4ZPG]

08:56 PM on 11/14/2011

Much of what you write is spot on! China is going for the kill, and stealing what remains of Western technology will enable the PRC to "right" what it considers as its "loss of face," in the 19th Century.....

It's past time to play the "access to prime markets" card in the "game" with China before its too late: The SINITIC(sp?) Communist Party fears the disorder of mass unemployment and/or chaotic inflation internally far more than the West, BUT the West still OWNS those markets.....!

[stargazer13]

10:03 AM on 11/14/2011

blaming china

will not fix this problem !

Updated memo to china do not borrow The U.S Monies

because they will blame you.. if ? you do !!

[ADVOCATE4ZPG]

09:00 PM on 11/14/2011

Blaming China and the U.S. companies that have decamped there IS a necessary FIRST STEP. Whilst you've been navel gazing(?), over the past 30 years the U.S. and much of the West have suffered massive losses of basic industries.....

Plainly, you disdain the jobs and their holders, but they are needed far more than your sappy pleas for restraint (It's not clear from your prose...(???).....

[stargazer13]

10:14 AM on 11/15/2011

like I said before blaming china will not fix this

[TheCycad]

09:56 AM on 11/14/2011

Yep... China, with vast natural resources and a growing DESERT.

[hapycap]

09:05 AM on 11/14/2011

China's a communist country and no matter how USA companies spin it they are out to break USA and they are doing a good job.

[Kye154]

08:44 AM on 11/14/2011

Actually, the Chinese stopped the practice of pegging the yuan to the dollar back in 2005. Then it was pegged at 8.27 yuan to the dollar. The value of the dollar has been steadily dropping since, and took a real nose dive when Bernanke printed up another $600 billion last year, and devalued the dollar further. Now, the exchange rate is 6.32 yuan to the dollar. Also, why would the Chinese want to peg the yuan to a dollar that is loosing it's value? There is no logic to that. So, all this innane nonsense about trade deficit and unemployment problems relating to the value of the yuan is a manifestation of our own propaganda, which we contrived about China. But the really funny part about all of this, we come to believe our own propaganda and lies. The real problems are here in America, not in China.

[Martin Privat]

09:43 PM on 11/14/2011

Real problem is a false sense that America needs to be more competitive with China. We will never compete with slave wages.

[frank1946]

07:24 AM on 11/14/2011

Hu Jintao is right on the Yuan !

Obama Policies simply destroy Jobs, Obama blames China. DEMS sucker for the Cover-Up !

Politicans are Liars, Chinese know how to kick Butt ?

They simply Buy American Assets with Large Trade Surplus.

[FormerlyTCnSRQ]

07:56 AM on 11/14/2011

Didn't Bush try to privatize and sell the sea ports in New York and New jersey to the Arab Emirates?....didn't the subsequent anger stop him cold in his tracks?

[CologneCitizen]

05:01 AM on 11/14/2011

The USA has made the mistake in competing with emerging countries in a race of wages to the bottom. Some game they cannot win as life is indeed more expensive in the USA. The Republicans defend the low wages of course, because they cater to the huge number of uninformed Americans that might think it is patriotic to work for peanuts. The USA should finally start with what developed countries are doing for some time now. Invest in education. It is the only chance to stay in the game.

[PhillyJack]

06:11 AM on 11/14/2011

No, education is not the only chance to stay in the game. We can also take "quasi-punitive" steps toward cheaters like China. You can raise all kinds of barriers to their imports, and also make it less profitable for American companies to shift job markets to nations that pay their workers peanuts.

What you say is just wrong, and let me tell you why. When an American student gets 100K in debt (minimum) in order to try to secure some successful future and then finds NO JOB in that field because companies have shifted that job to a Chinese job market that pays 5% of what the American job market does, then that student is left with a student loan that can't be paid back. Who benefits? Just the big corporation; while the poor student is victim of a false notion that if you educate yourself you will be able to pay back your debt.
I think you might be peddling some BS rhetoric unawares.
Shut down China by limiting its imports to this country, and punishing it for its currency manipulation, and charging companies that export jobs there, thus making it very unprofitable... a targeted blacklist.

[skyshoes]

06:50 AM on 11/14/2011

Put simply when I ship something to Brazil, 100% duty. I also have been caught up in random "embargoes" trying to ship to Brazil. Germany just sent a small shipment back (haven't seen it yet, its been weeks), the customs form stated the cost and weight, they demanded two invoices. . My pharmacist (Indian decent) says India charges 100% duty. China 33% import duty (not absolutely sure on that figure) requires you have to have a Chinese partner. Coke tried buying China's largest bottlers a few years back... The Politburo Standing Committee of the Communist Party of China said NO.

Hint: All these countries, playing the U.S. for a sucker, have economies on the upswing.

China ships to U.S. No duty. I would dig that deal too Hu.

With respect to Obama he is way in over his head negotiating with these pirates. Add to that the pressures he will be under from the corporate world (fellow travelers) who have no regard for the well being of the United States and her populace. This does not bode well.

[ricardodiaz666]

04:43 AM on 11/14/2011

asdfasdf

[itstimetotakeitback]

04:32 AM on 11/14/2011

America needs to take responsibility for it's own mistakes.. Until then, nothing will change.. It's time to learn Mandarin.. China is only getting stronger... That's not going to change.

[PhillyJack]

06:15 AM on 11/14/2011

That is nonsense. We are making them stronger. We are allowing American oligarchs to profit incredibly from this. All during my business studies all I ever heard was "we can't stop globalization" bla bla bla. We can do whatever the hell we choose! The American Oligarchs want you to think you can't stop the flow of jobs to China, or lift trade barriers with them. Who said we can't? Who loses the most if we do and who gains if we do? That is the real question that should be asked.
I prefer to have a 20% price increase at Walmart and make 50% more on my paycheck if you don't mind.

[itstimetotakeitback]

11:39 AM on 11/14/2011

That's my point. We put ourselves in this situation.. BUT, Will we do anything to change it?? Probably NOT..

[rotorhead1871]

12:22 AM on 11/14/2011

quit buying stuff from china.....NOW. Hey APPLE...are you listening????

[booshh]

12:15 AM on 11/14/2011

"Even a major appreciation of the yuan would not resolve the problems facing the United States,"

That's not the point President Hu, just like having a fair and impartial U.S Supreme Court won't eliminate crime, but it would still serve the interest of justice.

[ruolivert]

05:23 PM on 11/14/2011

You should research the manipulation of the US currency by the Federal Reserve before you start making judgment about China's monetary policy

[booshh]

09:05 PM on 11/14/2011

Yeah, so? China is still the problem.

[gomezrules]

11:28 PM on 11/13/2011

I think the ChiComs might be right about this one! They're not causing our economic woes, the clowns and incompetents we have in the WH and Congress are!

[mxytsplyk]

12:02 AM on 11/14/2011

True, but we should be under no illusion that high-tech knockoffs would be the biggest result of easing restrictions on those exports.