BBC News
By Chris Hogg
BBC News, at the Boao Forum for Asia, Hainan, China

Allowing the yuan to strengthen against the dollar would hurt the Chinese economy in the short-term, a senior Chinese official has told the BBC.

But Yi Xiaozhun, a vice-minister in the commerce ministry, said he expected the currency to rise in the longer-term.

He accused other countries of trying to force its appreciation now.

There has been speculation that China is preparing to allow the yuan to appreciate before President Hu Jintao arrives in Washington next week.

Mr Yi was speaking at the Boao Forum for Asia, a gathering of senior officials and business figures from across Asia on the southern Chinese island of Hainan.

China’s commerce ministry is close to the country’s exporters, and reports suggest its officials have been lobbying hard against those inside the Chinese government who say the value yuan should now be allowed to rise.

Politicised debate

China, in effect, pegged its currency to the weakening US dollar in late 2008 when the effects of the global economic crisis started to be felt here .

That has given the country’s exporters an unfair advantage ever since, critics say, because when the value of the yuan is artificially low, their goods appear cheaper.

Some American politicians and academics… have politicised this argument
Yi Xiaozhun, Chinese commercy ministry vice-minister

Mr Yi says the crisis is not yet over, and so an increase in the value of the yuan now would hurt China’s economy.

He argues the biggest headache for China is that this is no longer simply an economic problem but has become the focus of relations between the two countries.

“Some American politicians and academics, because of hardship at home, have politicised this argument,” he says.

“They are blaming other countries, including China, for their own problems. This is unreasonable.”

The vice commerce minister refuses to be drawn on what is the appropriate exchange rate for the yuan and the dollar.     more …