WORLD NEWS Wen dismisses currency pressure By Geoff Dyer in Beijing 487 words 28 December 2009 Financial Times

FTFT London Ed1 04 English Copyright 2009 The Financial Times Ltd. All rights reserved. Please do not cut and paste FT articles and redistribute by email or post to the web. China's premier in defiant mood 'Foreign friends' protectionist, he says Wen Jiabao, China's premier, has said that Beijing will not give in to foreign demands for its currency to strengthen, taking an increasingly defiant tone amid mounting international pressure. In an interview published by Xinhua news agency yesterday, Mr Wen said some of the demands for China to let its currency appreciate were an effort to contain the country's development. "We will not yield to any pressure of any form forcing us to appreciate. As I have told my foreign friends: on the one hand, you are asking for the renminbi to appreciate; and on the other hand, you are taking all kinds of protectionist measures." By keeping the renminbi stable against the US dollar, China was contributing to the global economy's recovery, he said. "The purpose [of these calls for appreciation] is to hold back China's development," he added. China dropped its formal dollar peg in 2005 and since then has allowed the renminbi to trade within a narrow band. But since the middle of last year it has operated a de facto peg. That has meant the Chinese currency has depreciated by about 9 per cent against a basket of currencies representing its main trading partners since early this year, even though the Chinese economy has rebounded more quickly than any other big economy. However, Beijing argues its exchange rate against its trading partners is roughly in line with its level at the start of the global financial crisis in September 2008, when the US dollar at first strengthened. In recent weeks, Demands for China to let its currency appreciate to help rebalance the global economy have come not only from the US and European Union but also from developing nations such as Brazil and Russia. A few economists had forecast Beijing might begin to shift policy early in the new year on the grounds it needed to act to head off incipient inflationary pressures and because any change in policy nearer the June G20 summit might appear to the domestic audience as giving in to foreign pressure. Mr Wen indicated Beijing might accelerate measures to prevent the economy overheating. The government was worried property prices in some parts of China had risen too quickly, he said, and that bank lending this year had been excessive, though he added the authorities were already taking measures to moderate activity. "It would be good if our bank lending was more balanced, better structured and not on such a large scale," he said. There were no immediate signs of inflation, he said, but the government had to be watchful because "inflation may emerge". According to Xinhua, Mr Wen also said China would continue to fight for "its due rights for further development" in future climate change talks. ftnewspaper_20091228.xml|20091228L104.408

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