BEIJING — China will keep its currency "basically stable" this year, a state news agency said Friday, amid growing foreign pressure to ease exchange rate controls that critics say hamper trade and might be slowing a global recovery.
Premier Wen Jiabao planned to say in a report to China's legislature that the yuan will be kept "basically stable" at an "appropriate and balanced" level, according to the Xinhua News Agency. It said authorities would "improve the mechanism" for setting the exchange rate, but gave no details.
China's trading partners complain the yuan is undervalued, giving its exporters an unfair price advantage and swelling its multibillion-dollar trade surplus. President Barack Obama vowed last month to press for the elimination of currency systems that depress export prices and hurt American companies.
The issue is especially sensitive at a time when other countries are trying to boost trade to recover from the global economic crisis.
Beijing has kept the yuan steady against the US dollar since late 2008 to help Chinese exporters compete amid slumping global demand.
A group of US manufacturers and labor unions, the Fair Currency Coalition, called on Congress last month to declare China's currency controls an illegal subsidy and pass legislation imposing sanctions if they are not ended.
"China's subsidy-induced price advantage fuels that country's trade surpluses and undercuts America's economic recovery," the group said in a Feb. 24 statement.
The yuan's value was tied to the dollar for decades, but Beijing broke that link in 2005 and allowed the currency to rise by about 20 percent through late 2008. That rise was halted after the global crisis hit.
Beijing is under pressure to let the yuan rise to ease strains in China's economy but analysts say Chinese leaders are reluctant to act for fear a stronger currency might cost jobs in export industries.
In a Feb. 3 meeting with US senators, Obama promised to "get much tougher" in trade disputes with Beijing. He said he would press for an end to currency systems that put American companies at a disadvantage. (AP)