Iran and yuan ease US-China tensions
Some analysts believe the peace signs follow the announcement that Hu would attend the Washington summit on nuclear security next 12 April. A bargain appears to be in the making, whereby Beijing would not make any fuss over sanctions against Tehran in exchange for a truce over the value of the yuan against the US dollar.
The White House and the Chinese Presidency confirmed the hour-long phone call between the two leaders.
“China attaches importance to nuclear security, opposes nuclear proliferation and nuclear terrorism, and supports international cooperation” on nuclear security, Foreign Ministry spokesman Qin Gang.
The statement by the White House makes no reference to sanctions against Iran, but it points out that the US President “underscored the importance of working together to ensure that Iran lives up to its international obligations”.
However, Israel’s attack last night against the Gaza Strip is raising concerns about the possible fallout from greater tensions in the Middle East. Rumours abound in Israel about preparations for an attack against Iran, which bankrolls Hamas.
Similarly, nothing was said about the other source of tensions between Washington and Beijing, namely the value of the yuan, which is undervalued according to the Americans.
After Washington called for the revaluation of the Chinese currency in recent weeks and Beijing responded by levelling its own accusations against US protectionism, the US president appears to have decided to put the issue on the backburner, for now.
“In the past few weeks, rhetoric has turned sour from both sides, but this development is one of the initial signs” that relations are thawing, said Hao Hong, a Beijing-based global equity strategist at China International Capital Corp.
“The latest development should make it more likely for Beijing to start moving away from the renminbi’s current de facto peg within the next few months, if not weeks,” Qu Hongbin, chief China economist at HSBC Holdings Plc in Hong Kong, wrote in a report yesterday. “Since China is growing much faster than most of its trading partners, keeping the de facto peg for too long will only invite more protectionism.”
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