Chinese President Hu Jintao stands firm on Chinese currency

Reuters
Hu stands firm on Chinese currency
By Daisuke Wakabayashi and Scott Hillis

EVERETT, Washington (Reuters) - Chinese President Hu Jintao on Wednesday stood firm against U.S. demands to significantly revalue China's currency as a way of reducing his country's vast trade surplus with the United States.

Speaking at a Boeing Co. facility north of Seattle on the eve of a White House summit with President George W. Bush, Hu said he wanted to make foreign-exchange markets more efficient. But he said China was not ready for a drastic change in the value of renminbi currency, also known as the yuan.

"Our goal is to keep the renminbi exchange rate basically stable at adaptive and equilibrium levels," Hu said.

"China will continue to firmly promote financial reforms, improve the renminbi exchange rate-setting mechanism, develop the foreign exchange market, and increase the flexibility of the renminbi exchange rate," he said.

Revaluing the yuan is a key U.S. demand which officials say is vital to make American exports more competitive, erase an advantage Chinese manufacturers currently enjoy and reduce China's bilateral trade surplus, which last year reached $202 billion.

Hu arrived in Washington late on Wednesday.

A top U.S. official said this week China's progress on the currency issue had been "agonizingly slow" and Bush was certain to raise it when the two leaders met at the White House.

U.S. experts said they did not expect a breakthrough on the exchange rate. Rather, they were hoping for slow, steady progress in the months ahead.

Hu said China did not seek a large surplus. "China takes the trade imbalance between our two countries seriously and works hard to address this issue," he said.

On the other hand, the fault did not all lie on China's side, he said. The United States also needed to act to ease export controls and reduce protectionist measures.

CHEERED BY BUSINESS

Hu's whirlwind 27-hour tour around Seattle included visits at Boeing and Microsoft Corp. and a lavish dinner with 100 business and government leaders at the lakeside estate of Microsoft co-founder and world's richest man, Bill Gates.

The Chinese leader encountered crowds of protesters unhappy about China's policy on Taiwan, Tibet and the Falun Gong spiritual movement, which is banned in China, but business and political leaders welcomed him with open arms.

"By doing business in China, U.S. companies have made substantial profits, enhanced their competitiveness and strengthened their position in the U.S. market," Hu said.

After a tour of Boeing's assembly factory, Hu told about 6,000 employees of the aircraft maker that China would need to buy 600 new planes in the next five years and 2,000 in the next 15. Beijing recently signed a deal with the company to buy 80 jets worth about $4 billion.

"This clearly points to a bright tomorrow for future cooperation between China and Boeing," he said, noting that the U.S. company currently had two-thirds of the Chinese commercial aviation market.

China sought to quell U.S. trade complaints before Hu's visit by signing contracts worth $16.2 billion while Vice Premier Wu Yi visited the United States last week.

Hu went out of his way to display charm, accepting a baseball hat with the company logo from an employee and then hugging the surprised worker. Chinese reporters said they had never seen anything similar from Hu.

The Chinese president also surprised reporters when he fielded questions about software piracy during Tuesday's Microsoft visit, pledging to enforce laws to protect intellectual property.

U.S. industry groups estimate 90 percent of DVDs, music CDs and software sold in China are pirated. The intellectual- property issue is expected to figure prominently when Hu meets Bush.

Bush has also said he would bring up Iran's nuclear program. He wants China to cooperate in putting more pressure on Tehran through the U.N. Security Council.