Xinhua published an editorial on international affairs addressing yuan appreciation. It stated that trade deficits that some countries have with China are caused by their domestic structural and policy factors, not the exchange rate with China. The editorial questioned the magnitude of the reported trade deficits, suggesting the increase in Chinese exports may be attributed to the foreign companies in China exporting back to their own home countries.
“From whatever angle, to pressure a substantial appreciation of the yuan within a short time is unwarranted, unfounded and even, it is more useless. Some Western politicians have tirelessly speculated a ‘yuan appreciation’ theory. Its underlying motive is questionable. The financial crisis has brought people to see that the current world economic imbalance is mainly attributed to excess consumption in some developed countries, and to the economic contraction. To pressure for yuan appreciation does not help resolve these issues. In fact, it is developed countries that should make positive policy adjustments to reform their economic structure in order to fulfill their international responsibilities.”
Source: Xinhua, March 18, 2010
http://news.xinhuanet.com/world/2010-03/18/content_13197957.htm