The United States should stop politicizing China's currency issues, a spokesman for the Ministry of Commerce said on Friday, emphasizing that China's economic stability and growth mean more benefits to the US economy and consumers.

Yao Jian, spokesman for the ministry, said China should not be a "scapegoat" for the US' economic and unemployment woes.

China is the third largest exporting destination of the US, but the US also benefits from the large number of US companies operating in China that export back to the US, Yao said.

Yao's remarks came hours before the US Department of Treasury was scheduled to release a biannual currency report on Friday, in which the largest economy in the world will decide whether to label its major trading partner a currency manipulator.

The last time China or any other country was cited by the US government in the semiannual report was in 1994.

Although many believe the US is highly unlikely to do so this time, the US has been increasing its pressure on China over the yuan, especially as Congressional elections are scheduled for November.

"The US cannot shift its own domestic problems onto China and the yuan," Yao said at a monthly news briefing.

"The US arguments and moves are implausible, incorrect and run against the World Trade Organization (WTO) rules," he said.

Zhou Xiaochuan, China's central bank governor, wrote in an article on Friday in China Finance, a central bank magazine, that China will continue yuan reforms, but exchange rate changes must be reasonable and balanced.

On Friday, the yuan traded 6.6497 against the dollar. So far this year, the yuan has risen by 2.6 percent against the US dollar.

Yao said there is no direct relationship between the exchange rate and China's trade surplus with the US, so the yuan should not be blamed.

China's trade surplus narrowed to US$16.88 billion in September, the lowest in the past five months and also the second month that the figure has fallen.

Economists predict the surplus will keep shrinking in the months ahead, given that China's imports will continue to rise and the growth of external demand will slacken.

Unreasonable appreciation of the yuan not only hurts China but also the world's economy, as China contributed one half of the world's economic growth in 2009.

At China's largest trade fair - the China Import and Export Fair - which opened on Friday in Guangzhou, many small and medium-size companies expressed their concerns about an appreciating yuan.

"We are under great pressure. Should the exchange rate rise rapidly, many of us will be out of business," Dai Chao, export manager of Macro Gas Appliances, was quoted by Xinhua News Agency as saying. The company is a medium-sized private company that sells gas appliances to East European and South American countries.

As China's trade surplus has remained high the past few months and the world economic recovery is still in limbo, some countries and regions have joined the US in calling for yuan revaluation to help boost their economic growth.

The European Union's Central Bank Chief Economist Juergen Stark was quoted as saying on Friday there are "good reasons to believe" the yuan will continue to appreciate in the future.

Japanese Prime Minister Naoto Kan said China and the Republic of Korea should "take responsible actions within common rules and allow currencies to be more flexible".

Yao refuted Kan's claim. "It is not reasonable for Japan to comment on China's currency policies, given the fact that Japan has benefited a lot by running a large trade surplus with China for years," Yao said.

Japan has run a large trade surplus with China for eight years and is now the largest exporter to China. During the first nine months of the year, China's imports from Japan grew by 38.4 percent from a year earlier, and China's trade deficit with Japan surged by 82.2 percent year-on-year.

Responding to the Chinese restrictions on rare earth exports to Japan, Yao said China's measures are in line with WTO regulations, and the restrictions not only apply to exports, but also manufacturing.

"It is out of concern for environment protection. We want to cooperate with developed countries on upgrading technology and making the industry more efficient," he said.

Japan is the world's largest importer of rare earth. China owns more than 90 percent of the production of the rare earth widely used in hybrid cars and cell phones.

(China Daily October 16, 2010)