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Cheney pressures china currency on market value { April 14 2004 } Original Source Link: (May no longer be active)    http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1079420345552 http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1079420345552 China faces pressure to revalue currency By James Kynge in Beijing Published: April 14 2004 19:49 | Last Updated: April 14 2004 19:49 China faces growing pressure from speculators to revalue the renminbi against the US dollar, as Wen Jiabao, the prime minister, on Wednesday rebuffed a call by Dick Cheney, the US vice-president, to let markets set the exchange rate. "Hot money" moved into China by speculators circumventing Beijing's closed capital account boosted the country's foreign exchange reserves to a record $439.8bn at the end of March, up $36.5bn since the end of 2003. The increase in foreign currency reserves, which exacerbates domestic inflation by adding to the money supply, came despite a trade deficit of $8.4bn during the first quarter. The figures show that although the renminbi may not be undervalued from a trade perspective, China's main battle is with speculators who believe that sooner or later the country will be forced to allow an appreciation. Mr Wen told Mr Cheney that the "current situation of the renminbi conformed to China's economic and financial development", according to Zhang Qiyue, a foreign ministry spokeswoman. The currency is in effect pegged at about Rmb8.28 to the US dollar, and although Beijing plans to widen the band, it has not said when or how. A US administration official said: "They are proceeding cautiously, with some justification. There's a common view of what the ideal ought to be." He did not divulge what this was. The issue has become politically sensitive in the US, which ran a $125bn bilateral trade deficit with China last year, as concerns over job losses to China mount ahead of November's presidential election. In China, too, the issue has grown in importance as Beijing has tried to formulate a macro-economic policy to tame runaway economic growth, emergent inflation, and overinvestment in some sectors. New figures have shown that China's attempts to impose discipline on its banks have been set back. Money supply, measured by the broad M2 measure, was up 19.1 per cent at the end of March and loan growth rose by an annualised 21 per cent - far higher than the contraction of 13 per cent the central bank is aiming for in 2004. Even wholly owned state banks such as the Bank of China have failed to do the central bank's bidding. Their loan growth in the first three months was up nearly 10 per cent, a spokesman said. However, the People's Bank of China remains determined to maintain a stable value for the renminbi, in terms of both its exchange rate and domestic interest rates, officials said. "Maintaining a stable currency value is our key goal," said one financial official. Although speculation is growing that China may have to raise interest rates, policymakers are far from convinced that such a move would resolve China's problems, academics said.

Amex issues cards in china { March 30 2004 } Asain stocks rebound after fed massive ratecut { December 2008 } Cheney pressures china currency on market value { April 14 2004 } China currency overload { July 2006 } China currency peg doesnt violate wto China delays plunge in US treasuries China diversifies forex holdings amid dollar fears China favors shift to currency basket China not manipulating currency says bush { May 10 2006 } China premier wont yield on yuan exchange rate { May 16 2005 } China severs its currency link to dollar { July 21 2005 } China signals switch in reserves away from dollar { January 6 2006 } China to pass japan as american primary lender China to relax yuan dollar peg Euro to allow china to dump the dollar { August 2007 } European bank joins attack on china dollar pegged currency Foreign currency piles up in china { January 17 2006 } Growing chinese influence in economic forum Imf seeks balance in china currency policy debate Korea central bank chief urges china to revalue { February 21 2005 } Senate threatens tariff unless china revalues currency Senators threaten china with tariffs about currency Treasuries fall fears china pulls currency Treasury says china not manipulating currency { October 30 2003 } Treasury told china stop pegging currency to dollar US pressures china currency change { April 22 2005 } Us says china not manipulating currency { October 30 2003 } US threatens china over yuan peg to dollar { May 17 2005 } US threatens trade protection or china revalues currency { April 7 2005 } US urges china currency to rise against dollar { March 23 2006 } Yen climbs on report china ready to loosen exchange rate Yen soars against dollar after china announcement { March 7 2002 } Yuan gains 20perc since end of peg { May 2008 } Yuan record high to dollar { April 2006 } Files Listed: 34

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