Minister: US Congress Must Back Out of Currency Spat

Wednesday, 10 Nov 2010 07:28 AM

 

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The G-20 summit will try to address global challenges and should not discuss China's yuan or any other specific currency, China's vice foreign minister said on Wednesday.

Cui Tiankai said many developing countries were concerned about the liquidity being injected into the global economy as a result of the latest monetary easing by the Federal Reserve, the U.S. central bank.

Asked whether the yuan would be discussed at the summit, Cui said: "I think there is a broad agreement among G-20 members that we should not focus on any particular currency of any particular member, because this is not the root cause of the global economic problems."

Washington blames Beijing for keeping the yuan at what it considers an artificially low level that gives Chinese exporters an unfair advantage in global markets.

"The recent crisis is certainly caused not by the Chinese currency or any other emerging market's currency," Cui, who was speaking in English, added.

Cui, who has been working on the draft of the communique that will be issued on Friday after the two-day meeting, said China was ready to use its greater voting power in the International Monetary Fund to make the fund better serve the interests of developing countries. He did not elaborate.

Cui said the relationship between Beijing and Washington remained sound despite the recent passage of a bill by the House of Representatives, the lower chamber of Congress, that aims to punish China for holding down the yuan.

China had maintained effective communication with the United States over key policies, he said.

"I don't think the U.S. Congress is the right place to discuss or to take any decision on the Chinese currency — it is certainly not the right place," If either side "chooses a confrontational approach, I think everybody will come out as losers."

Cui said he hoped the G-20 summit would send strong messages against trade protectionism and in support of international monetary reform.

"The leaders are coming to Seoul for better coordination and cooperation. They are not coming for confrontation," he said.

In listing the "structural problems" the G-20 must tackle, Cui mentioned imbalances in global development and the international financial system as well as "weakness in international regulation and supervision."

Abundant liquidity, especially after the Fed decided last week to print money to buy $600 billion worth of U.S. government bonds "is posing some risks to the financial stability of many countries, including the BRIC countries," Cui said, referring to Brazil, Russia, India and China.

"I think many other developing countries and emerging markets have similar concerns," he said.

"It's quite possible that many G-20 members will express that concern at the summit with recommendations and proposals on how to deal with the situation," said Cui, China's senior G-20 negotiator.

© 2014 Thomson/Reuters. All rights reserved.

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