China won't be pressured over yuan peg: Wen

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Chinese Premier Wen Jiabao on Sunday struck a defiant note about the country's controversial exchange rate policy, saying the government would not give into foreign demands to let the yuan rise.

Wen said the currency was facing growing pressure to appreciate, but insisted that China was committed to keeping it stable, having virtually pegged it to the dollar since the global financial crisis worsened in the middle of last year.

"We will not yield to any pressure of any form forcing us to appreciate. As I have told my foreign friends, on one hand, you are asking for the yuan to appreciate, and on the other hand, you are taking all kinds of protectionist measures," he said.

"The true purpose (of these calls) is to contain China's development," he added in an interview with the official Xinhua news agency.

The yuan has fallen against the currencies of most of its trading partners this year because it has been fixed to a weakening dollar, while China's economy has bounced back strongly. US senators have asked for an investigation into whether current yuan policy represents a form of subsidy that would justify tariffs on Chinese imports.

Wen also repeated an oft-made declaration that the stable yuan had contributed to the global economic recovery.

A series of foreign policymakers, including US President Barack Obama, European Commission President Jose Manuel Barroso and International Monetary Fund chief Dominique Strauss-Kahn, have visited China in recent months to press for an appreciation of the yuan.

But many analysts believe that Chinese leaders will want to see several consecutive months of increasing exports before letting the yuan resume the path of gradual appreciation it followed from 2005 to mid-2008.

The market expects a roughly 2.7% appreciation of the yuan over the next 12 months, according to offshore forwards pricing.