WASHINGTON – China could act on revaluing its currency over the course of the year, without admitting defeat in their battle with the international community over its value, former US secretary of state Henry Kissinger said Sunday.
In an interview with CNN, Kissinger, who worked to open US relations with China 40 years ago, said he would be “disappointed” if China did not make such a move on the yuan or renminbi (RMB).
“If it can be done in a way that it does not look like a Chinese defeat, in other words, if they don’t have to step up to a rostrum and say say, ‘We have agreed to move the currency,’ I believe they now understand a way it might be done with some mutual concessions over a period, say, of a year.”
“I would be disappointed if that did not happen,” he said.
Kissinger acknowledged, however, that the change may not reflect the percentage the United States is looking for.
“But I think that (Treasury Secretary) Tim Geithner has laid out something that is compatible with the way the Chinese define their self-respect on this issue so that it does not look as yielding to American pressure,” he said.
Beijing has pledged to increase the flexibility of the yuan’s exchange rate to make it a global currency rivalling the dollar, but critics have charged that China still unfairly undervalues the yuan to boost its own exports.
China has warned that a big upswing in the yuan’s value would hammer the country’s key export industries, sparking job losses for millions of workers and leading to social unrest.
Since Beijing’s pledge last June to let the yuan trade more freely against the dollar, it has gained about 3.6 percent against the US currency.
In the past month the pace of appreciation has accelerated, with the yuan gaining 1.1 percent as the United States pressed China for action.
But Geithner said last week the real appreciation of the yuan was more than 10 percent a year due to inflation.
In 1971, Kissinger made a landmark visit to China as secretary of state, paving the way for a trip by then-president Richard Nixon a year later.