China on Tuesday restated its long-standing policy to maintain the basic stability of the yuan at a reasonable and balanced level, after U.S. President Barack Obama said he would discuss the currency when he visits Beijing.
Asked about Obama's comments, Foreign Ministry spokesman Qin Gang said China would keep improving the currency's exchange rate mechanism with a view to gradually making the yuan more flexible.
Qin added that China hoped the United States, as the most important economy in the world, would pursue a stable fiscal policy to keep the dollar's exchange rate steady and ensure its own growth and that of other nations.
I want to make it clear that the United States is the number-one economic entity in the world, he told a regular news conference.
We hope that ... the United States can overcome the difficulties brought by the international financial crisis and at the same time maintain the medium-term and long-term sustainability of its fiscal policy, Qin said.
Obama told Reuters in an interview in Washington that he would raise the issue of the yuan, which many economists and U.S. manufacturers consider to be undervalued, when he comes to China next week.
But Obama also said the two countries share a common interest in helping to rebalance the global economy in order to deliver sustainable growth, a view echoed by Qin.
If you ask me how relations between the two countries are right now, my first answer is: the economies of China and the United States are mutually related, integrated, dependent on each other and getting closer to each other day by day.
But there are tensions between the two.
U.S. manufacturers complain that Beijing artificially holds the value of the yuan down to make its exports cheaper and American goods more expensive for Chinese consumers.
Economists say this has led to imbalances in the world economy by contributing to big trade deficits in the United States and trade surpluses in China.
Leaders of the Group of 20 developed and emerging economies have pledged to aim for policies to ease these imbalances.
But China has also been angered by recent controls slapped on some of its imports, and Qin issued a new warning against barriers to commerce.
We urge the U.S. side to make positive efforts with China to resolve frictions and questions in trade, including acknowledging China's status as a full market economy and halting some protectionist measures, Qin said.