Saturday, February 6, 2010

Tensions spill over as Obama attacks Beijing's undervalued yuan

BEIJING - AUGUST 08:  Basketball player Yao Mi...Image by Getty Images via Daylife

Long-simmering tensions between Beijing and Washington over the value of
China’s currency have spilled over into angry words at the highest level,
further damaging ties hit by a series of disputes in the few brief weeks
since the start of the year.

The chill in one of the world’s most important diplomatic relationships is
almost certain to deepen in the next few months as the world’s largest and
third-largest economies tackle an array of contentious issues, ranging from
cyber attacks to the Dalai Lama.

China responded swiftly to a pledge from President Barack Obama that he would
be tougher with Beijing over the value of the yuan, which Washington
believes is artificially undervalued. Foreign Ministry spokesman Ma Zhaoxu
said: “Accusations and pressure do not help to solve the problem."

However, there is the risk of one side overplaying its hand: US approval last
month of arms sales to Taiwan, flagged months in advance, has drawn
unusually fierce angry volleys from Beijing.

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