German Minister Sides With China Against US In Currency Row

German Minister Sides With China Against US In Currency Row

German Economy Minister Rainer Bruederle severely criticized US Wednesday for blaming China of underrating yuan to fuel its exports. “At the moment I have more criticism of the American Treasury secretary than of China,” Bruederle said during a visit to China.

The US had also pointed finger at Germany for preferring exports to the interest of its partners. The United States “are on the eve of elections, and have not managed to master their own problems, … my concern is that they are favouring short-term solutions for electoral and partisan reasons,” the minister added.

The minister noted that the trade between Germany and China is expected to hit 100 billion euros this year, and it has facilitated revitalization of German economy.

Bruederle advised Americans to diminish their trade deficit by improving their economic competitiveness.

The yuan has increased by 2.2 percent since June 19th, 2010, after the People’s Bank of China (PBOC), the central bank, announced its decision to reform yuan exchange rate management and to enhance exchange rate flexibility. The yuan has climbed 23 percent since July 2005.

Zhuang Jian, senior economist of the Asian Development Bank (ADB) in China, said, “Foreign exchange rates may not be directly linked to the value of the yuan… China has increased imports, which would help rebalance its international payments.”

Sun Shijian, a Shanghai based economist said “The US is, in a sense, trying to reduce its debt to China through pressuring (China) to appreciate its currency”. US insistence that China quickly raise the value of its currency will result in reducing its immense foreign exchange reserve in dollars that has reached US $2.65 trillion.

Chinese exports are expected to diminish in view of frail employment growth in the US and measures implemented to tighten economy in Europe.

Moody’s Analytics Senior Economist Matt Robinson said, “The government will (instead) try to strike a balance between insulating China’s economy from global weaknesses and keeping the domestic housing market from rebounding.”