BEIJING, 3 September 2003 — China, bristling at calls to revalue the yuan, ruled out any change to its currency peg during a visit by US Treasury Secretary John Snow yesterday but offered a token easing of its capital controls. Snow, who landed in Beijing yesterday afternoon, is under pressure at home to urge China to revalue the yuan, which is pegged to the dollar, to save jobs at hard-pressed US factories.

The International Monetary Fund weighed in yesterday, saying it was in China’s best interests to move toward a more flexible exchange rate system. “Such a move would improve the central bank’s ability to control money and credit growth, and also help cushion China’s economy from domestic and external shocks,” IMF Managing Director Horst Koehler said in a statement.

China stood its ground. “There won’t be any change in the exchange rate just because someone is visiting China,” a spokesman for the People’s Bank of China, the central bank, told Reuters.

The state-run China Daily newspaper said it did not want the yuan to become an issue in the 2004 US presidential race. “China’s currency, unfortunately, is in a position of finding itself involved in the finger-wagging sessions that accompany this essentially American saga,” it said in a commentary under the title “Don’t meddle with the yuan”.

And shortly after Snow arrived, Foreign Ministry spokesman Kong Quan told a news conference China would maintain exchange rate stability. “The stable exchange rate of the renminbi is conducive to the economic stability and development of China, Asia and the world,” he said.

American manufacturers say a cheap yuan, held at around 8.3 to the US dollar, gives Chinese rivals an unfair edge.

Snow has said little publicly while in Asia about China’s currency but Japanese Finance Minister Masajuro Shiokawa said they had agreed in talks in Tokyo that the market should set the value of the yuan. During his first day of talks snow met with Vice Premier Huang Ju, Minister of Finance Jin Renqing and central bank governor Zhou Xiaochuan, Xinhua news agency said.

Upon returning to his hotel in the evening, Snow said he had “a very good set of meetings,” but declined to comment further. Prior to his arrival in China, he had said the yuan would be on the agenda during his talks with Chinese officials, who are expected to include Premier Wen Jiabao today.

“We want to make sure ... that we are heard on the subject of maintaining flexibility in exchange rate regimes as well so that American manufacturers and American firms are not disadvantaged,” Snow said.

Several ranking US politicians have focused on the issue and the negative impact on American labor, including Joseph I. Lieberman, who is vying to become the Democrats’ presidential candidate in the 2004 US elections. On the eve of his trip to China, the US treasury chief outlined the basic US position as he was likely to put them to his Chinese hosts.

“My long-held view on that subject (of exchange rates) is that a well-functioning international financial system is one that’s based on flexible exchange rates determined in competitive markets,” he said.