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Yuan move won't alter US trade gap
"It is a requirement of our reform, sustainable development and economic stability," he said. "It is not a result of discussion and consultation with others." Though the old system made Chinese exports relatively cheaper, it forced Chinese companies to pay more for imported oil, iron ore, and other products.
Beijing decided the time was right to revalue the currency because of progress in Chinese financial reforms and stable growth of the world economy, a central bank spokesman said in comments published by the People's Daily. It was the first time Beijing had explained the timing of its decision. The spokesman cited "substantive progress in various financial reforms," including efforts to establish more market-based interest rates and foreign-exchange management.
The United States and the European Union welcomed the yuan rate change, which they hope will help their companies compete with a flood of low-priced Chinese goods that they say threaten their jobs. A major U.S. trade group, the National Association of Manufacturers, said Thursday the change had the potential "for beginning to correct the huge trade imbalances that have been created by distorted currencies." China's Asian trading partners also greeted the shift. Japan said it was a necessary step that puts China more
in line with the international currency market, although officials acknowledged
the rise in the yuan could in turn boost the yen's value and hurt Japan's
export-oriented economy.
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