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China hits back at US plans for G20

Nov 05 2010 07:39 Reuters

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Beijing - China on Friday pushed back strongly against US policies ahead of the G20 summit, ridiculing Washington's plan to impose current account targets and warning of risks in the Fed's monetary easing.

The remarks by Cui Tiankai, a vice Chinese foreign minister, were the first high-level official stance from Beijing on the issues.

"We believe a discussion about a current account target misses the whole point. If you look at the global economy, there are many issues that merit more attention - for example, the question of quantitative easing," he said.

The United States proposed at the G20 finance ministers' meeting last month that countries should cap current account surpluses or deficits at 4% of GDP as part of efforts to rebalance the global economy.

The idea of numeric targeting met strong resistance from Japan and Germany, though some Chinese advisers had said that Beijing might be able to see eye-to-eye with Washington. Cui put these suggestions to rest.

"Of course, we hope to see more balanced current accounts," Cui said. "But we believe it would not be a good approach to single out this issue and focus all attention on it. The artificial setting of a numerical target cannot but remind us of the days of planned economies."

In a briefing on China's outlook for the G20 summit in Seoul next week, Cui also rejected attempts by other countries to set targets for yuan appreciation.

"That would indeed be asking us to manipulate the renminbi's exchange rate, and it is something that we will of course not do," he said. The yuan is also known as the renminbi.

China has resisted calls from other nations to let market forces set the value of the yuan. The United States in particular has said China keeps its currency artificially cheap, giving its exporters an unfair advantage.

Beijing has repeatedly insisted that it alone will decide how to reform its currency.

Chinese President Hu Jintao kicked off a two-nation European visit on Thursday, in hopes of easing strains with the EU ahead of the upcoming G20 summit, after European leaders closed ranks with Washington in urging China to allow its currency to rise more quickly.

US EASING

Cui said China would closely monitor the impact of the Federal Reserve's plan announced this week to buy $600bn of US government bonds to stimulate the economy.

"They owe us some explanation," he said. "I've seen much concern about the impact of this policy on financial stability in other countries. As the main issuer of a reserve currency, we would hope that it (the United States) adopts a responsible position."

Meanwhile, Beijing would keep the door open to discussions with Washington, Cui said, adding that he was confident the relationship of the world's two largest economies will remain healthy.

Emerging market economies said the Fed's move made a substantive deal on cutting global economic imbalance less likely at the G20 meeting in Seoul.

united states  |  china  |  g20
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