Lifting the value of China's yuan currency would hurt, not help, global economic recovery and threaten the country's own financial and trade health, a Chinese state think-tank said in an essay published on Monday.
The essay from the research institute of China's Ministry of Commerce was the government's latest broadside aimed at stifling international pressure on the yuan, or "renminbi," which the United States, European Union and other major economies say is seriously undervalued against their currencies.
"Forcing the renminbi to appreciate would undoubtedly be unfavorable for the Chinese economy, and likewise do no good for the sustained recovery of the world economy," said the essay, which appeared in the Chinese-language International Business Daily, an official newspaper of the Ministry of Commerce.
China's "renminbi exchange rate policy is appropriate and successful," it added.
"The (economic) recovery remains fragile and under these circumstances, appreciation would present major risks for the Chinese economy."
The essay adds to a recent chorus of official comment from Beijing rejecting expectations that the government will soon loosen its policy leash on the yuan, allowing it to rise against other major currencies and making Chinese exports more expensive.
Being responsible for China's trade sector, the Ministry of Commerce is especially hostile to the prospect of a more expensive yuan, and more expensive Chinese exports.
China allowed the yuan to rise 21 percent against the dollar between July 2005 and July 2008 before effectively repegging it to help its exporters cope with a slump in global demand.
Beijing now faces mounting international calls to let the yuan rise on the grounds that it is undervalued and stoking imbalances with other big economies, but showed no public sign of budging during summits with U.S. President Barack Obama last month and, last week, with European leaders.
In separate comments published on Monday in the Shanghai Securities News, Yu Yongding, an economist and former central bank adviser, said China should adjust its economic structure, including lowering its dependence on exports, as it faces the possibility that a growing U.S. current account deficit will lead to dollar depreciation and rising U.S. protectionism.
"Lowering the current account surplus is in line with China's own interests," Yu was quoted as saying at a weekend forum.
The Ministry of Commerce institute said yuan appreciation would sap China's economic recovery by dampening foreign investment, cutting into business profits and job growth, and threatening to increase financial deficits and bad bank loans.
The essay also asserted that lifting the value of the yuan would not help narrow China's trade surplus with the United States, as the Obama administration has claimed it would.
China's cheap goods have helped foreign consumers facing hard times, and raising the value of the yuan could hinder global economic recovery, said the think-tank.
"If Chinese production costs rose due to shifts in the (yuan) exchange rate, then naturally the United States would expand its imports from other developing countries," it said, "and the trade balance as a whole would not improve."
The source of global economic imbalances lie in deeper imbalances in the distribution of wealth and consumption, it said.
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