US urges China to make ‘more movement’ over yuan

CARTAGENA, Colombia –  The White House Saturday reacted cautiously to an announcement from China that it was loosening up its currency controls, saying it would like to see “more movement.”

“They’ve made some progress, we’d like to see more movement. We noted this announcement. We’re reviewing it closely,” a top administration advisor, Ben Rhodes, told reporters on the sidelines of a regional summit in Colombia.

“It comes in the continuum of us wanting to see the Chinese take more of these steps to see their currency appreciate to come in line with the market value,” added Rhodes, the deputy national security advisor.

The yuan is currently allowed to trade 0.5 percent on either side of a midpoint price set by the central bank every trading day.

The new rules announced Saturday by China’s central bank – seen as a shift towards adopting more market-oriented reforms – will come into effect on Monday and allow the currency to fluctuate by up to 1.0 percent either side.

The United States and Beijing’s other trading partners have long criticized China’s yuan exchange rate, saying it is kept artificially low, fuelling a flow of cheap exports that have helped trigger huge trade deficits.

Chinese Prime Minister Wen Jiabao however acknowledged last month that the yuan had increased in value by some 30 percent since 2005 in comparison to the dollar.