China’s No. 2 leader said yesterday his government hopes for positive relations with Washington and has no desire for a trade war nor plans to devalue its currency to boost exports.
Speaking at an annual news conference, Premier Li Keqiang emphasized the shared interests of the world’s two biggest economies. He said they should “uphold strategic interests.”
U.S. President Donald Trump promised to raise import taxes on Chinese goods to counter what he says are unfair practices by Beijing. That has prompted warnings China might retaliate, disrupting one of the world’s biggest trading relationships.
“We don’t wish to see a trade war breaking out between the two countries. That wouldn’t make our trade fairer,” said Li. He noted American companies also would be hurt.
Officials of the two countries are discussing a face-to-face meeting between Trump and Chinese President Xi Jinping, the premier said at the event held after the close of the national legislature’s annual meeting.
“China hopes that, no matter what bumps this relationship may run into, it will continue to forge in the right direction,” said Li.
The premier affirmed Beijing’s commitment to free trade, on which Chinese leaders have emerged as global advocates in response to Trump’s calls for import controls, despite complaints China is the most-closed major economy.
“China will continue to open to the outside world,” the premier said. “We welcome other partners to share with us in the development opportunities of China.”
The premier said China will help promote Asian regional trade but wants to work with its neighbors, possibly an attempt to ease concern about Beijing’s increasing economic dominance.
“We have an open mind and we are ready to work together with others,” Li said. “China has no intention to overreach itself.”
Turning to another politically sensitive issue, Li said Beijing has no plans to devalue its yuan to boost exports and will keep its exchange rate stable.
Trump has promised to declare Beijing improperly manipulates its exchange rate, a step that opens the way to possible trade sanctions.
“China has no intention to devalue its currency to boost exports,” said Li. He said the exchange rate “will remain generally stable.”
Economists say that while Beijing suppressed the yuan’s value in the previous decade, more recently market pressures are pushing the currency down relative to the dollar and its exchange rate would fall without central bank intervention.
The People’s Bank of China has been spending tens of billions of dollars a month to keep the yuan in line with the dollar after expectations it would decline led investors to move money out of the country.
The bank’s foreign currency reserves have declined by almost USD1 trillion from a peak of $3.99 trillion in June 2014.
The yuan could face further downward pressure if the U.S. Federal Reserve goes ahead with a widely anticipated interest rate hike. That would increase the return on U.S. bonds and other financial assets, drawing more money out of China.
The premier said Beijing will push ahead with market-oriented reforms of its mechanism for setting the yuan’s exchange rate. The band within which the yuan is allowed to fluctuate each day has been gradually widened but Beijing regularly intervenes to guide the currency’s movement. Gillian Wong, Beijing, AP