Analysts say China should not yield to Obama's hardline on yuan

As the U.S. President Barack Obama vowed to get "much tougher" with <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />China on exchange rates and trade, economists from Beijing said China should not give in to increased U.S. pressure that stems from its domestic problems.<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

Obama's talk of putting "constant pressure" on China to strengthen the yuan so to ensure the price of U.S. goods was not artificially inflated has drawn heated comments from economists in Beijing.

"His words are only aimed to appeal to domestic interest groups," said Tan Yaling, an expert at the China Institute for Financial Derivatives at Peking University.

Given China's growing international clout and the lack of jobs in the United States, Obama will certainly try to make China change its currency policy as this is an easy way to weaken China's export industry, she said.

It was also a relevant tactic given the President was losing ground in opinion polls and facing tough conditions leading up to the mid-term election later this year, she said.

Although the U.S. economy recovered to 5.7 percent growth in the fourth quarter last year, a record high in six years, jobless rate surged to more than 10 percent.

Fiscal deficit is set to hit 1.56 trillion U.S. dollars in 2010, or 10.6 percent of its GDP, a new record since the Second World War.

In the State of the Union Address on Jan. 28, Obama made it clear he would focus on jobs in 2010 and pledged to double exports in five years which could create 2 million jobs in the States.

Tan Yaling said Obama's export drive could not fix the job problem, while a stronger yuan would add costs for U.S. consumers.