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China Currency Manipulation

President George W. Bush on Wednesday said China would be "foolhardy" to attempt to push down the dollar in retaliation for US pressure over Beijing's alleged currency manipulation.

Described as China's "nuclear option" in the state media, such a move could trigger a crash of the already-falling greenback and a spike in the US bond yields, which could then dampen the beleaguered housing market and put the world's richest economy into a recession.

Critics of China in the United States say the yuan currency is undervalued by as much as 40 percent, making Chinese exports cheaper.

Some blame the low currency value for the loss of US manufacturing jobs and a US trade deficit with China that hit 232.5 billion dollars last year, according to Washington's figures.

Bush said Chinese goods had been beneficial for US consumers as they had helped hold down inflation, particularly in the face of rising energy prices. - AFP/ac