China cool to stronger yuan as IMF calls for rise

By Jason Subler and Aileen Wang

BEIJING (Reuters) - China's Commerce Ministry on Monday rebuffed calls for the yuan to appreciate, signalling resistance to change in a controversial foreign exchange policy that loomed over U.S. President Barack Obama's first visit to the Asian giant.

Outside pressure has been building on Beijing to let the yuan rise after more than a year of it being nearly frozen in place against the dollar, with the latest appeal voiced by the head of the International Monetary Fund on Monday.

China's central bank last week tweaked its description of how it manages the currency, setting off a firestorm of speculation that it might be willing to give the yuan some room to run, though market expectations of appreciation have remained muted.

Any change in policy as important as exchange rate management will need to come from China's top leadership, bridging the views of different parts of the government. The commerce ministry made clear its position.

"Either from the perspective of promoting stable global economic development, or from the perspective of promoting a recovery in Chinese exports, we must provide a stable and predictable environment for our enterprises, including macro-economic policy and currency policy," Yao Jian, a ministry spokesman, said on Monday.

Although China's economy has outperformed nearly all others in its recovery from the global financial crisis, many analysts believe that a sustained upturn in exports -- a core concern of the commerce ministry -- will be required for Beijing to let the yuan rise.

The comments by the commerce ministry's spokesman set the stage for tension with Obama, who arrived in Shanghai late on Sunday, ready to urge China to play its part in making global growth more balanced.

Getting China to spend more and save less is a principal ingredient of such change, because China's massive trade surplus with the United States stands as perhaps the most glaring of global economic imbalances and a major reason cited by Beijing's critics to explain why the yuan should be rising.