'China yuan policy hurting neighbours'

2010-11-03 11:15

Manila - China's undervalued yuan is hurting Asia as much as the United States, and neighbours should help convince Beijing to let its currency rise, financial experts meeting in the Philippines said on Wednesday.

The Asian Development Bank-backed Asian Policy Forum also urged regional governments as well as Group of 20 leaders meeting in South Korea this month to take steps to avert possible currency and trade wars.

Masahiro Kawai, dean of the Tokyo-based ADB think-tank ADB Institute and formerly an official at Japan's finance ministry, said neighbours must urge China to relax its exchange rate controls to help ease a global current account imbalance.

"Asian countries really have to... convince China that maintaining its current exchange rate regime is not good not only for China but also other neighbouring Asian economies," Kawai said.

Former Thai finance minister Chalongphob Sussangkarn, from the Thailand Development Resource Institute, said US monetary easing, intended to fight off recession, was adding to the problems.

"The US printing money and China keeping its exchange rate low is creating a spillover effect on the emerging market economies," he told the forum.

Chalongphob said the issue was apparently not tabled at a summit in Vietnam last weekend that grouped leaders from the Association of Southeast Asian Nations (ASEAN) with trading partners China, Japan and South Korea.

"We need a mechanism where we can discuss some cooperation in this area. It is very important particularly for ASEAN countries to have this discussion with China," he said.

The forum issued a statement calling for the Group of 20 rich and emerging economies to discuss the currency problem at its summit in South Korea on November 11 and 12.

"G20 nations need to oppose unilateral devaluation moves and support currency stability, while allowing for adjustments where needed," it said.