Premier Wen Jiabao gave his annual press conference yesterday. These are closely watched because Wen so rarely makes public remarks.
Wen’s opening statement focused on US arms sales to Taiwan and China’s role in the Copenhagen talks. But the real action came in the question period, when Wen was asked about China’s currency policy. Unlike central bank Governor Zhou Xiaochuan, when did not call the peg to the US dollar a “special” measure that will eventually end. Indeed, he seemed to go the opposite way.
“First of all, I do not think the renminbi is undervalued,” Wen said, according to the Wall Street Journal. “We are opposed to countries pointing fingers at each other or taking strong measures to force other countries to appreciate their currencies.To do this is not beneficial to reform of the renminbi exchange-rate regime.”
The Journal goes on to quote Nicholas Lardy, a China scholar at the Petersen Institute for International Studies in Washington. “I don’t recall him ever explicitly saying the currency was not undervalued,” Lardy said.
Wen also blasted the US for pressuring China to appreciate its currency while continuing a monetary policy that seems certain to result in dollar depreciation.
“I can understand that some countries want to increase their share of exports,” Wen said. “What I don’t understand is the practice of depreciating one’s own currency and attempting to press other countries to appreciate their own currencies solely for the purpose of increasing one’s own exports,” he added. “This kind of practice I think is a kind of trade protectionism.”