Wen Jiabao, China’s Premier, has denied his Government is keeping the yuan undervalued after lawmakers and economists said it is hampering a global recovery.
Mr Wen argued keeping the yuan stable was “an important contribution” to global recovery and said: “We oppose countries pointing fingers at each other and even forcing a country to appreciate its currency.”
Speaking at the end of China’s annual parliamentary session, 67-year-old Wen said: “I don’t think the renminbi is undervalued.”
He added:“ Since the outbreak of the international financial crisis, we have made strong efforts to keep the renminbi exchange rate at a stable level. This has played an important role in facilitating the global economy.”
US legislators and trade groups say the yuan, which is also referred to as the renminbi, is kept up to 40% below what its value should be against the US dollar.
The Chinese currency pegged the US dollar until 2005 when it was allowed to rise in value by about one fifth.
The peg was reinstated in July 2008 when the global financial crisis took hold.
However, China is under pressure to allow the yuan to find its own level in order to ease inflation, which reached a 16-month high last month.
Furthermore, a stronger yuan could help China achieve its target of making the economy more self-sustaining by increasing consumer buying power and cut its dependence on exports and investment.
China‘s economy, which is currently the world’s third largest, saw double digit growth in the fourth quarter of 2009 and the economy is now on target to surpass Japan and become the world’s no.2 economy.
Many analysts have described China’s recovery as “impressive” as Asia leads the way in the global recovery.
The economy grew by 8.7% in the 2009 year - which exceeded the Government’s initial expectations.
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