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China to 'study' currency float
BANGKOK, Thailand (CNN) -- China will consider a U.S. request to allow its currency to rise and fall with international markets, but President Hu Jintao says the issue needs more study, according to Bush administration officials. U.S. President George W. Bush faces political pressure from U.S. manufacturers and others who assert that American jobs are being lost because China keeps the value of its currency artificially low in an effort to promote its exports. After a day of meetings in advance of the Asia-Pacific Economic Cooperation summit in Bangkok Sunday, administration officials said Hu agreed to have Chinese experts meet with U.S. experts to discuss the steps necessary to have the value of China's currency, the yuan, set by markets. The issue has become a source of pointed Democratic criticism in the early stages of the presidential campaign, and Bush raised it in conversations both with Hu and with Japanese Prime Minister Junichiro Koizumi. Hu agreed that "in theory," China would like its currency valued at market rates, said a senior U.S. official who briefed reporters after the two leaders met. But the Chinese leader said that he could not take that step "in practice" now, because he was concerned "it could lead to instability" in China and across Asian financial markets. U.S. Treasury Department experts are prepared to enter into conversations with Chinese counterparts about steps necessary to have "a genuine floating exchange rate," the U.S. official said. President Hu earlier appeared to rebuff U.S. demands to revalue its currency but gave an assurance that China would keep its promise to open its booming market to foreign competitors, Reuters reported. Speaking to businessmen Sunday, Hu said holding the yuan steady suited China's economic development and was a benefit to Asia and the world. "We will maintain the basic stability of the yuan exchange rate at a reasonable and balanced level while further improving the rate-forming mechanism amid deeper financial reform," Hu said through an interpreter, Reuters reported. The United States ran a $103 billion trade deficit with China last year that many U.S. politicians and industrialists blame for the loss of some 2.7 million jobs in the last three years.
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