BEIJING - Chinese executives are joining US President Barack Obama in backing a stronger yuan, even as Premier Wen Jiabao says the currency isn't undervalued.
Yang Yuanqing, chief executive of Beijing-based computer maker Lenovo Group, said appreciation would boost consumers' purchasing power.
Qin Xiao, chairman of China Merchants Bank, saidan end to the yuan's 20-month peg to the US dollar would let lenders set market-based interest rates.
Chen Daifu, chairman of Hunan Lengshuijiang Iron & Steel Group, said a stronger currency would cut import costs.
While the comments conflict with Wen, who said on March 14 that criticising the exchange-rate policy amounted to "protectionism", they are in line with traders who expect the Government will let the yuan appreciate later this year.
US lawmakers have called on Obama to use the threat of trade sanctions to force an end to a currency regime that they blame for making their nation's manufacturers uncompetitive.
"We need to emphasise the benefits of yuan gains," Zhang Yanling, vice-chairman of Beijing-based Bank of China, the nation's biggest foreign-currency lender, said last week.
"The US should also be talking about both aspects of the issue. We shouldn't politicise it or become emotional."
Contracts linked to its future value predict China's currency will break its dollar link by July, rising beyond 6.8 to the US dollar in three months.
Twelve-month offshore forwards show the yuan will strengthen 2.2 per cent in the coming year, after pricing in a 3 per cent advance before Wen's press briefing in Beijing.
Morgan Stanley recommended on March 18 buying China Eastern Airlines, the nation's second-largest carrier, and Shanghai-based Baoshan Iron & Steel, the biggest publicly traded Chinese steelmaker.
The New York-based bank estimated that the 5 per cent maximum appreciation in the yuan it predicts for 2010 will have an average 2 per cent positive impact on the earnings of Chinese companies, making them more attractive.
