China denies that it manipulates its currency

A Chinese customer shows off a handfull of hundred-yuan notes at a bank in Beijing. China has denied that it was manipulating its currency, reacting to a statement by US President Barack Obama's Treasury secretary-designate Timothy Geithner.(Agencies)

NEW YORK, Jan 23 - China denied on Friday that it was manipulating its currency, Agence France Presse reported, reacting to remarks made by U.S. President Barack Obama's nominee for Treasury secretary a day earlier.

"The Chinese government has never used so-called currency manipulation to gain benefits in its international trade," AFP reported the Chinese Commerce Ministry as saying in a faxed statement.

The ministry also lashed out at "unsubstantiated criticism," saying it could risk a protectionist backlash in the United States, AFP reported.

On Thursday, Treasury Secretary designate Timothy Geithner said in a written response to questions from a U.S. Senate panel that "President Obama -- backed by the conclusions of a broad range of economists -- believes China is manipulating its currency."

The Chinese ministry also told AFP it intends to maintain "the basic stability of the exchange rate," adding "we will not rely on depreciation to support exports."

U.S. Treasury officials and members of Congress have long criticized China for keeping its currency, the yuan, undervalued, saying this undermines U.S. trade competitiveness by making Chinese goods artificially cheap.

But the George W. Bush administration avoided branding Beijing a currency manipulator, instead opting to urge authorities there to adopt a more flexible exchange rate.

The dollar has weakened by about 16 percent against the yuan since China revalued it in mid-2005, according to Reuters data.

(Agencies)