Paulson: Yuan not to blame for China trade gap

WASHINGTON – Chinese markets, not the strong yuan, are at the heart of the U.S. trade gap with China, U.S. Treasury Secretary Henry Paulson said yesterday while fielding questions at the Peterson Institute for International Economics, according to Bloomberg News.
“I don’t think there is much they can do with the currency that would make a big difference in the trade balance,” Paulson said, adding that China will continue to post trade surpluses with the United States and other nations until it boosts its own domestic demand. Last year’s U.S.-China trade gap totaled $232.5 billion.
He said the yuan has been growing “very slowly” against the dollar, despite China’s vibrant economy. “We need a flexible currency in the short term and need to get to a point where the currency is market-determined,” he said.
“I’m focused on increasing exports and reducing barriers and increasing competition in China and structural reform in China and seeing some signposts along the way,” said Paulson, who this month will host a Chinese trade delegation in Washington, D.C. “That will get to the [trade] deficit.”