After a summit meeting with Asia-Pacific leaders in Hawaii on Sunday, President Barack Obama said that China must do more, and more quickly, to allow the yuan to rise in value, because other countries feel “enough’s enough.” However, China’s President Hu Jintao, with whom Obama met on Saturday in Honolulu, denied that the value of the yuan had anything to do with U.S. economic woes.
Bloomberg reported that Obama says he is pushing China harder on the undervalued yuan and other trade matters because U.S. companies “are wary” that their ability to do business in China will be restricted if they complain directly.
Currently the trade deficit stands at about $273 billion, on total trade of $457 billion, and while 78% of U.S. companies responded to a survey by the American Chamber of Commerce in China that their China operations were very profitable, 24% said that economic reforms had done nothing to improve the business climate there for them. That was up from 9% in an earlier poll.
At a news conference after the meeting, Obama was quoted saying that yuan appreciation was too slow and that Chinese exporters “like the system the way it is…. Changes are difficult for them politically, I get it,” he said in the report. “But the United States and other countries, I think understandably, feel that enough’s enough.” Referring to the currency valuation, Obama said, “We recognize they may not be able to do it overnight, but they can do it much more quickly than they’ve done it so far.”
Hu, meanwhile, pushed back against the president’s words, with the Chinese Foreign Ministry releasing a statement saying that the U.S. trade deficit and unemployment are not caused by the yuan exchange rate and that even if the yuan were to appreciate greatly it would not solve U.S. problems.
”The trade deficit and unemployment problems are not caused by the yuan exchange rate. Even a major appreciation of the yuan would not resolve the problems facing the United States,” Hu was quoted saying, adding that the country will “continue reforming its exchange rate mechanism.”
China is pushing the U.S., for its part, to relax restrictions on high-tech exports to China considered sensitive by Washington, and to make it easier for Chinese firms to invest in the U.S. as a means of resolving the trade deficit.