The attendees of this year's Canton Fair, China's largest trade fair and a barometer of global economic health, have sent a clear signal that the world markets accept China's policy of maintaining a stable yuan.
More than 24,000 Chinese companies are expected to export goods worth 37 billion U.S. dollars at the 110th Canton Fair. Over 200,000 buyers from 200 countries and regions applied to attend the fair, according to the fair's organizers.
Despite the escalating eurozone debt crisis, 12,000 European buyers visited the fair during the first three days of its opening, a year-on-year increase of nearly 20 percent.
The U.S. has long accused China of manipulating its currency, making the yuan cheaper in order to make its exports less expensive in the world marketplace.
U.S. Secretary of State Hillary Clinton said Friday that it is "time to stand up" to China, suggesting the formation of an international coalition to force China to allow its currency to rise further.
"I don t think there is a base to form such a coalition," said Li Jie, an executive with the Konka Group Co., a leading Chinese home appliance manufacturer.
"Chinese companies are not just relying on low prices to gain customers. It is product innovation and technological upgrades that make Chinese goods popular all over the world," Li said.
Konka's sales of TV sets in overseas markets totaled two billion U.S. dollars last year. Despite global economic turmoil, the company's exports have already exceeded last year's total with two months still remaining.
"Konka aims to deliver value-added, technology-driven, custom-built products," Li said, adding that fluctuations in the yuan exchange rate have had a limited impact on the company's exports.
However, a stronger yuan has already presented a challenge to the country's millions of small exporters.
The appreciation of the yuan has hit record highs since the start of the year. The swift appreciation has exceeded the expectations of many small exporters and squeezed their profit margins.
Xu Punan, general manger of the Ningbo Yongfa Group Co., a manufacturer of safety deposit boxes, said the company' s profits have grown by just three percent in recent years, compared with a 28-percent rise in its export volumes.
"There are large numbers of Chinese exporters operating on relatively slim margins who will struggle to absorb a dramatic hike in the value of the yuan. Many are already facing rising labor costs and raw material costs. If the currency rises too fast, many exporters will shut down," said Wang Xiaoguang, a researcher from the Chinese Academy of Governance, an advisory body to the central government.
Analysts said the world economy cannot afford to see a massive factory shutdown, as no other countries can replace China as the "workshop of the world" in the short-term.
In the eyes of overseas buyers, including U.S. traders, pressing for yuan appreciation will not change the U.S. trade imbalance.
Although some U.S. retailers have started looking at other emerging economies for goods, as rising production costs have pushed "made-in-China" costs higher, their eyes have not returned to the U.S. market, said Matthew Shay, president of the National Retail Federation.
Official data showed that the yuan has appreciated by more than 30 percent against the U.S. dollar since July 2005, when China stopped pegging the yuan to the dollar and adopted a managed-float currency system, under which the yuan's value was linked to a basket of currencies.
However, during the same period, China's trade surplus against the U.S. still increased by a large margin, while the unemployment rate in the U.S. rose from 7 percent to more than 9 percent.
In addition, U.S. exports to China have jumped by 468 percent during the past decade, while its exports to other countries rose by just 55 percent.
Pressing for swift yuan appreciation will push up the prices of Chinese goods, which may be problematic for European and American consumers.
"Over the past decade, thanks to imported goods from China, American consumers saved more than 600 billion dollars in spending. Every family in the EU saved 300 euros every year in the same way," Premier Wen Jiabao said Friday.
ING economists estimated that tariffs on Chinese imports could add 1 percent to U.S. inflation and cost American consumers 100 billion dollars.