Paulson: Slower RMB appreciation could ignite tension

Paulson: Slower RMB appreciation could ignite tension

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Hank Paulson, former US Treasury Secretary, said that a slower pace of renminbi appreciation in the next year might create problems in US-China relations, The Wall Street Journal reported. “It’s in our interest and China’s interest that China continues to reform the RMB and moved to a market-determined” value, he said. Slowing the pace of appreciation “would be unfortunate for [China] and it would heighten tension with the US,” Paulson added. The value of China’s currency has increased at an annual rate of 5-6% against the US dollar since it was effectively de-pegged in June 2010, but appreciation stalled since early November. China’s leaders are widely thought to be concerned with the deteriorating state of Europe’s economy and its impact on the country’s export industry, though an investor flight to safety might also be pushing down the currency. In the US, legislation which would impose tariffs on Chinese goods has passed the Senate but is being blocked in the House of Representatives.