BEIJING – China, under repeated calls to change its foreign-exchange policy and revalue the yuan, ruled out any change to its currency peg during a visit by U.S. Treasury Secretary John Snow (search) on Tuesday but offered a token easing of its capital controls.
Snow, who landed in Beijing on Tuesday afternoon, is under pressure at home to urge China to revalue the yuan, which is pegged to the dollar, to save jobs at hard-pressed U.S. factories.
For nearly a decade, Beijing has kept its currency from trading in global markets - a strategy that brought stability and helped shield China from the 1997 Asian financial crisis. But as exports surge, China is facing growing demands to raise the value of the yuan.
Washington and other governments complain the currency is too cheap and gives Chinese exports an unfair advantage, hurting foreign companies and wiping out jobs in countries trying to compete with China.
The International Monetary Fund (search) weighed in on Tuesday, saying it was in China's best interests to move toward a more flexible exchange rate system.
"Such a move would improve the central bank's ability to control money and credit growth, and also help cushion China's economy from domestic and external shocks," IMF Managing Director Horst Koehler said in a statement.
China stood its ground.
"There won't be any change in the exchange rate just because someone is visiting China," a spokesman for the People's Bank of China (search), the central bank, told Reuters.
The state-run China Daily newspaper said it did not want the yuan to become an issue in the 2004 U.S. presidential race.
"China's currency, unfortunately, is in a position of finding itself involved in the finger-wagging sessions that accompany this essentially American saga," it said in a commentary under the title "Don't meddle with the yuan."
"The critics that believe China manipulates the yuan's value assume that every currency in the world should be floated in the market," China Daily said. "This assumption in itself is porous."
It added: "Should China now give in to pressure only to face dire consequences later? No way."
And shortly after Snow arrived, Foreign Ministry spokesman Kong Quan told a news conference China would maintain exchange rate stability.
"The stable exchange rate of the renminbi is conducive to the economic stability and development of China, Asia and the world," he said.
Snow has said little publicly while in Asia about China's currency.
In Japan on Monday, Snow and Japanese Finance Minister Masajuro Shiokawa agreed to encourage - but not pressure - China to allow its currency to appreciate.
"China seems to be keeping the yuan fixed and this is not competitive from an international financial viewpoint," Shiokawa said Tuesday in Tokyo. "I agreed with Secretary Snow that China should let the yuan float."
Snow was due to meet central bank Governor Zhou Xiaochuan and Finance Minister Jin Renqing on Tuesday afternoon.
"I think John Snow is wasting his time, because China is not going to revalue its currency because the U.S. wants them to," the Economist Intelligence Unit's chief economist, Robin Bew, told Reuters in Hong Kong.
China is worried about the damage a revaluation may cause to export growth that has helped fuel one of the world's fastest-growing economies.
It has dug in against the pressure to revalue -- mainly from the United States, Japan and South Korea -- saying jobs and social stability are more important than changing the yuan peg.
But Beijing, continuing with a series of adjustments to capital controls aimed at easing the pressure on the yuan to appreciate, said it would raise the limit on the amount of foreign exchange Chinese travelers could buy from banks.
This minor adjustment to capital controls was unlikely to satisfy U.S. manufacturers, who have targeted China's currency in a debate that is gathering steam ahead of the U.S. election.
China had a $103 billion trade surplus with the United States last year. Money from exporters, combined with strong investment inflows and speculators hoping to make money if Beijing buckles, have pushed Chinese foreign exchange reserves through the roof.
Reuters and the Associated Press contributed to this report.