China’s premier on Sunday rejected foreign pressure to let its currency rise and complained that trade protectionism by other governments was holding back the country’s development.
The complaint by Premier Wen Jiabao, China’s top economic official, came as the plunge in consumer demand caused by the global crisis is aggravating disputes between China and trading partners including the United States and Europe over access to markets for tires, shoes and other goods.
A key irritant is Beijing’s currency controls, which Washington and other governments say keep its yuan undervalued, giving China’s exporters an unfair price advantage and swelling its politically volatile trade surplus.
“The basic stability of the renminbi is conducive to international society,” Mr. Wen told the official Xinhua News Agency in an interview. “We absolutely reject all pressure on us to raise its value.”
Mr. Wen complained that foreign governments were pressing China to revalue the yuan at a time as they are raising barriers to imports.
“The essence of this is to hold back China’s development,” Mr. Wen was quoted as saying.
He did not single out any country for criticism, but the United States has imposed antidumping duties on Chinese—made tires and some types of steel pipes while Europe is curbing imports of Chinese—made leather shoes. For its part, Beijing has launched an antidumping probe of imports of U.S. autos.
Global leaders have promised to avoid protectionism in response to the collapse in global consumer demand, which economists say will delay a recovery. But China and other governments accuse each other of improperly supporting their companies at the expense of foreign rivals by subsidizing exports and hampering imports.
Turning to domestic issues, Mr. Wen said China’s banks should lend less, reflecting concern that a credit surge this year to support Beijing’s 4 trillion yuan ($586 billion) stimulus might be driving dangerous overinvestment that could leave lenders with bad loans if unneeded projects fail.
“It would be good if our bank lending was more balanced, better structured and not on such a large scale,” the premier said. Xinhua paraphrased him as saying lending “had been growing on a too large scale.”
The government told banks earlier to restrain loan growth and said it will use credit controls to favour more energy—efficient industry. Authorities say they have rejected dozens of proposed industrial projects in an effort to curb overinvestment.
Mr. Wen gave no updated official outlook for 2009 economic growth, which a government report this month forecast at 8.3 percent.
The premier rejected suggestions that the stimulus might be fuelling overinvestment, saying none of the money went to industrial projects. However, a key focus of the stimulus has been spending on building highways and other public works. That has channelled money into China’s steel and cement industries - two areas where the government says it says supplies of assets exceed demand and further investment should be curbed.