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backCHINAtalk July, 2008

A stronger dollar is good for US: China

China has told the United States that a strong dollar would be good for the US economy, an assistant minister at the Ministry of Finance said yesterday.

"We have conveyed to the US government that a strong US dollar is in the interest of the US economy," Zhu Guangyao said yesterday in Beijing. He spoke at a briefing on the twice-a-year economic-relations meeting with the US, known as the strategic economic dialogue, which takes place this month.

The dollar has fallen 9 percent against the yuan in the past year and more than 13 percent versus the euro as a housing recession sparked a credit crisis that may drive the world's largest economy into a recession.

In October last year, US Treasury Secretary Henry Paulson told China that a stronger yuan would be good for Asia's second-largest economy.

The yuan rose by the most in more than three months yesterday on speculation China will seek a stronger currency to reduce its trade surplus and curb inflation, said Bloomberg News.

"US exports to China grew in excess of 20 percent every month this year, while our shipments to the US rose less than 10 percent," the Chinese trade ministry's Department of American & Oceanic Affairs Director General He Ning said yesterday. "If this trend continues, US-China trade gap will close."

The yuan rose by the most in more than three months yesterday, climbing 0.34 percent to close in Shanghai at 6.9230, from 6.9495 on Thursday. China has allowed a 2.7-percent gain over the past three months, making it the best performer among the 10 most active currencies in Asia outside Japan.

"We want a stable global economy and a sustainable US economy," Zhu said, adding that China and the US will discuss the dollar, the crisis over subprime mortgages and the global economic slowdown at the June 17-18 meeting in Washington.

Source: Shanghai Daily - GAI

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