Fed's Bernanke omits reference to yuan 'subsidy'

US Federal Reserve Chairman Ben Bernanke, in a speech in Beijing, dropped a reference that was in his prepared text to the undervaluation of the yuan providing an effective subsidy to Chinese exporters. The language could have been interpreted as provocative in some trade and legislative circles. The advance text released by his office said: "Greater scope for market forces to determine the value of the RMB would also reduce an important distortion in the Chinese economy, namely, the effective subsidy that an undervalued currency provides for Chinese firms that focus on exporting rather than producing for the domestic market."

Speaking to the Chinese Academy of Social Sciences, Mr Bernanke said a more flexible yuan, or renminbi (RMB), would have significant advantages for China.