China's premier rejected foreign pressure over its exchange rate controls and said Sunday the Chinese currency will be kept "basically stable."
Premier Wen Jiabao promised to reform currency controls, but gave no indication when that might happen. Washington and other trading partners are pressing Beijing to ease controls that they say keep the yuan — also called the renminbi — undervalued, giving its exporters an unfair price advantage and swelling its trade surplus.
"First of all, I don't think the renminbi is undervalued," Wen said at a news conference. "We oppose all countries engaging in mutual finger-pointing or taking strong measures to force other nations to appreciate their currencies."
Some American lawmakers and trade groups want Congress to impose punitive tariffs on Chinese goods if Beijing fails to act. Critics say the yuan is undervalued by up to 40 percent against the dollar.
"We will continue to reform the renminbi exchange rate regime and will keep the renminbi basically stable at an appropriate and balanced level," Wen said.
China faces pressure to allow the yuan to rise to ease inflation and other strains in its own economy. A stronger currency also could help Beijing to achieve its goal of making the economy more self-sustaining by boosting consumer buying power and reducing reliance on exports and investment.
Analysts expect Beijing to let the yuan rise against the dollar some time this year. But they foresee a gradual increase of no more than 5 percent this year, which would not produce dramatic changes in the U.S. and European trade deficits.
Beijing tied the yuan to the dollar for decades, but broke that link in 2005 and allowed it to rise by about 20 percent through late 2008. The government slammed on the brakes after the crisis hit and has held its currency steady against the greenback to help exporters compete as a plunge in global demand wiped out millions of Chinese factory jobs.
"Since the outbreak of the international financial crisis, we have made strong efforts to keep the renminbi exchange rate at a stable level," Wen said. "This has played an important role in facilitating the global economy."