Beijing sticks to its guns on currency appreciation

The vice governor of the central bank, Wu Xiaoling, stressed on Thursday that Beijing will keep its currency "at a reasonable and balanced level" even as it looks at ways to reduce the country's rocketing trade surplus. Speaking at the Chinese Academy of Social Sciences, Wu acknowledged that China's large current and capital account surpluses were putting the yuan under pressure to appreciate, the Wall Street Journal reported. But she stressed that structural factors rather than currency appreciation were key to reducing the trade surplus, which hit US$85.71 billion in the first five months, up 84% year-on-year. Wu said Beijing would seek to redress the trade balance through fiscal and tax policies intended to boost domestic demand. Earlier, US senators Richard Shelby and Chris Dodd, who lead the Senate Banking Committee, introduced legislation that would give the Treasury Department more power to deal with what they believe is a deliberately undervalued Chinese currency.