China has gone to great lengths to support its currency and would not devalue the renminbi to spur exports or combat trade frictions, the governor of the central bank said Sunday.

Speaking on the sidelines of China's annual parliamentary session, Yi Gang said Washington and Beijing had discussed exchange rates in recent trade talks and reached a consensus on many "crucial" issues.

US President Donald Trump has long accused Beijing of manipulating its currency to gain a trade advantage and Washington has been seeking assurances on the exchange rate in the ongoing trade talks between the two nations.

"Let me stress here that we will never use the exchange rate for the purpose of competition, nor will we use the exchange rate to increase China's exports or as a tool in handling trade frictions," said Yi.

"We have committed not to do this," Yi told reporters.

He noted the US Treasury Department had declined many times to label China a currency manipulator in its semi-annual report on international exchange rates.

Beijing and Washington have been locked in a bruising trade war since last year, imposing tit-for-tat tariffs on more than $360 billion in two-way trade, which has left global markets reeling.

"The two sides reached consensus on many crucial and important issues," Yi said, without specifying which issues.

China's banking regulator told reporters earlier this week that the two sides would reach a consensus on the exchange rate and indicated it would not be a sticking point in the way of a larger trade agreement.

"China's efforts and achievements in maintaining the basic stability of the renminbi exchange rate at a reasonable and balanced level are recognised by the whole world," Yi said.

In the past three or four years the exchange rate had been under market pressure to depreciate, Yi said, adding that Beijing had used up $1 trillion of China's foreign currency reserves to stabilise the currency.

There have been conflicting comments from Washington and Beijing on the progress of negotiations.

Beijing is hopeful about its next round of trade talks with the US, China's vice minister for commerce Wang Shouwen said Saturday, after revealing that top negotiators had tried to hammer out a deal over a lunch of burgers and eggplant chicken in a recent round of talks.

Donald Trump on Friday said he remains optimistic but will not sign a pact unless it is a "very good deal", and a top economic advisor said the US president could walk away from a bad deal.

The two sides were thought to be readying for a Trump-Xi meeting at the end of March, but the US ambassador to China said Friday that the two countries were not yet ready to bring together the two leaders for a summit and deal signing.

China consumer price index at lowest level in a year
Beijing (AFP) March 9, 2019 –

The consumer price index in China fell to its lowest level in a year last month, while producer prices hardly budged, according to figures published Saturday by the National Bureau of Statistics.

The consumer price index (CPI) — a key measure of retail inflation — rose just 1.5 percent in February year-on-year, compared with 1.7 percent in January. It has now declined for four consecutive months and is at its lowest point since January 2018.

China is grappling with a decline in global demand — notably from the United States, which launched a trade war against Beijing last summer.

Growth in China dropped to 6.6 percent last year, its lowest level in 28 years. The government this week announced it is aiming for growth of between just 6 and 6.5 percent this year.

The producer price index (PPI) — an important barometer of domestic demand — edged up by only 0.1 percent in February, in a further sign the Asian giant's economy is slowing.

That figure, matching January results, is the lowest for more than two years. The indicator has been in constant retreat for seven months.

The increase in consumer prices is in line with analyst forecasts, but the rise in producer prices is weaker than expected. A Bloomberg news survey found an average forecast growth of 0.2 percent by economists.

"CPI inflation will most likely remain far below the 2019 government target of 3.0 percent," said Nomura economist Ting Lu in a note.

Production prices could fall into negative territory this year, he added.

"Disinflation continues, and deflation in the manufacturing sector may be around the corner," said Hong Kong economist David Qu, according to Bloomberg.

"The weak consumer and producer price data underline the need for continued government support for the economy," he added.

Faced with a slowdown in activity, Premier Minister Li Keqiang announced a series of support measures on Tuesday including a reduction in company charges and VAT.