A sharp rise in China's yuan currency might cut the U.S. trade deficit by as much as one third and create enough American jobs to put at least a modest dent in the unemployment rate.

Then again, it may also lead to a destabilizing spike in Chinese unemployment and spark a trade war that drags the global economy back into a deep recession.

These are the conflicting forces U.S. lawmakers must consider as they decide whether to pass a bill which would pressure Beijing into letting its currency rise more rapidly.

The debate over whether China's currency is undervalued is essentially closed. Beijing readily acknowledges that a gradual yuan appreciation is in its best interest, and it has allowed the currency to rise by about 6.5 percent since June 2010.

Chinese Premier Wen Jiabao urged stronger financial support for cash-strapped smaller businesses, the state-run Xinhua News Agency reported on Wednesday, in the latest indication of the toll China's inflation fight is taking on its small and midsize businesses.

Mr. Wen made the remarks during his visit to China's eastern Zhejiang province on Monday and Tuesday, according to Xinhua. Zhejiang is home to numerous small entrepreneurial businesses.

Smaller enterprises should be a priority for bank credit and enjoy more tax preferences, Mr. Wen said, according to Xinhua. He added that banks should set targets for loans to small companies, reduce the cost of credit for them and allow them a higher nonperforming loan ratio.

To prevent the funding shortage from spreading, Mr. Wen also called for better regulation of private lending, Xinhua said.

On Wednesday, the yuan — also known as the renminbi or “people’s currency” — rose to a record post-float high, as the dollar fell to 6.3772 yuan on mainland Chinese markets, according data from the state-run Xinhua News Agency.

However, plunges in global stock markets and for many commodities on Thursday sent the Chinese unit back down, with the central bank’s dollar “parity rate” — the midpoint of the government-set trading range for the domestic market — rising to CNY6.3808 Thursday and CNY6.3840 on Friday.

China's currency and government bonds offer investors a unique way to take advantage of the country's continued strong economic growth.

China and the UK welcome private-sector interest in developing an offshore market in London to trade the yuan.

Following a press conference on Thursday afternoon by Chinese Vice-Premier Wang Qishan and U.K. Chancellor of the Exchequer George Osborne, the two governments issued a statement confirming the agreement.

"We agreed to collaborate on the development of renminbi-denominated financial products and services in London, and our regulators stand ready to support this market," the Chancellor said.


China National Offshore Oil Corp (CNOOC) said on Saturday it will enhance supervision and assistance to ConocoPhillips China (COPC) in handling the oil spills in north China's Bohai Bay to make sure that COPC fully implement maritime authority's requirements.

The statement came after the State Oceanic Administration (SOA) said COPC failed to meet its requirements of "screening out all potential sources for oil spills and blocking leaks once and for all" before the deadline of August 31.