China PM favours 'stable' exchange rate

China's Premier Wen Jiabao has said he is in favour of a "basically stable exchange rate" for the yuan while its main trade partner the United States is calling for the currency's appreciation. Wen made his remarks Friday as he inaugurated a major import and export fair in the southern city of Guangzhou, the official Xinhua news agency reported. China defends its exchange rate regime, saying it is moving gradually to make the yuan currency more flexible. The yuan has risen more than seven percent against the dollar since mid-2010, when Beijing relaxed a de facto peg to the US currency, imposed in 2008 to protect its exporters during the global financial crisis. But this has failed to silence critics in the US and elsewhere who argue the Chinese currency is undervalued by as much as 30 percent. Chinese exporters are concerned that their margins will be squeezed further if the yuan rises further against the dollar, especially as their production costs have increased, with wages rising rapidly and inflation above six percent. The yuan's gradual rise against the dollar has halted since mid-August, as the euro weakened because of the European debt crisis. The United States, which posted a record $29 billion trade deficit with China in August, is calling for a faster appreciation of the yuan. US Secretary of State Hillary Clinton said Friday it was time to stand up to China as she suggested an international coalition could form to force Beijing to raise the value of its currency.