BEIJING — China, facing growing pressure from the United States, Europe and Japan to raise the value of its currency, is sending out a somewhat ambiguous response these days: Not yet.
For nearly a decade, China has firmly fixed its currency in relation to that of the U.S. at an exchange rate of about 8.28 Chinese yuan (known domestically as the renminbi, or "people's money") to one dollar.
As China's economy has boomed, economists generally agree, its currency has become undervalued at that exchange rate. But Chinese leaders seem to like it that way, mainly because an undervalued yuan keeps China's goods cheap and its export markets up, thus staving off the unemployment that would go along with a drop in world sales of Chinese-made products.
Other countries are complaining, though, and in recent weeks the volume seems to have been turned up several notches, especially in the United States. Both Federal Reserve Chairman Alan Greenspan and Treasury Secretary John W. Snow suggested recently that China should take steps to strengthen the yuan.
There are also signs that China's monetary policy could intensify as a campaign issue heading into next year's elections in the United States: A bipartisan group of U.S. senators recently called on Snow to investigate whether China was responsible for "significant job loss" in American manufacturing by keeping the yuan artificially low.
In response, China is rejecting the idea of letting the yuan float -- that is, allowing world financial markets to determine its value. China has offered signs that it may adjust the currency upwards, though presumably not as much as its critics demand, but has not set any timetable for doing so.
"We believe that a stable renminbi exchange rate is not only in the interest of China's economic development but also in the interest of Asia and the world," a Chinese Foreign Ministry spokesman, Kong Quan, said at a recent briefing for reporters in Beijing. He did say China would "improve the exchange rate mechanism," an apparent indication of an upward revision, but he did not elaborate.
China's exchange policy will be "determined first and foremost based on China's own domestic economic needs,'' Commerce Minister Lu Fuyuan said at a meeting of Asian and European trade ministers last week in Dalian. ''It doesn't mean we won't adjust the yuan in the future.''
