China urges G20 on currency stability

Chinese President Hu Jintao has urged the world’s major economies to ensure currency stability and lower trade barriers at a meeting of G20 finance leaders.

China's President Hu Jintao making his opening remarks
China's President Hu Jintao making his opening remarks

His statement came at the Xianghe gathering of top finance officials from the US and other governments on Saturday.

The delegates are expected to press Beijing to ease tight controls on its currency.

Speaking in Beijing’s lavish Great Hall of the People, Hu called on other countries to “jointly promote balanced and orderly development of the world economy” and to “adopt responsible economic policies to introduce necessary economic restructuring, keep major currencies reasonably stable and prevent trade protectionism”.

The gathering of finance officials from 20 of the world’s most important economies, which convened later at a conference centre about an hour outside Beijing, allows China to showcase its rising economic and diplomatic influence while pressing its agenda for a greater say for developing nations in world financial institutions.

“We must strengthen international cooperation to seize opportunities and meet challenges together so as to promote balanced and orderly development of the world economy,” Hu said.

Delegates were attending meetings in Xianghe, a well-guarded fortress-style resort 60km southeast of Beijing that is modelled on the ancient imperial capital, with tall walls, imposing gates and ornate towers.

Legions of police patrolled and guarded the highway to the site, keeping streets clear for motorcades.

Strength in diversity

Hu exhorted the gathering to respect diverse models of development, reflecting China’s rejection of pressure to waver from its own style of communist-led market reforms.

Hu Jintao (R) greets US Treasury Secretary John Snow

Hu Jintao (R) greets US Treasury
Secretary John Snow

“We should support all countries to choose development paths that suit their own conditions and improve their development models in the light of their respective national realities,” he said, adding that greater cooperation on those grounds would “inject new vitality into the world economy”.

Such progress is threatened, he warned, by the widening divide between the industrialised world and the least developed nations, financial crises and “new manifestations of trade barriers and protectionism”.

In their closed-door sessions, US Treasury Secretary John Snow, who is accompanied by Federal Reserve chairman Alan Greenspan, and other foreign officials were expected to push Beijing for faster currency reforms.

Critics say the yuan is undervalued by up to 40%, giving Chinese exporters an unfair price advantage and hurting foreign competitors.

But Chinese Finance Minister Jin Renqing, chair of the Group of 20 meetings, on Friday reiterated Beijing’s intention to loosen currency controls only gradually, to keep economic stability.

The yuan

China re-valued the yuan by 2.1% on 21 July. At the same time, it gave up a US dollar peg for the yuan and began setting its value against a basket of currencies that includes the dollar, Japanese yen and euro, among others.

The yuan’s movements are still limited to a narrow range. In the past three months, it has appreciated only about 0.3%.

US Federal Reserve chairman Alan Greenspan (L) also attended

US Federal Reserve chairman
Alan Greenspan (L) also attended

Beijing expects the G20 gathering, whose participants account for 90% of the world’s gross domestic product and 80% of all trade, to issue two documents – one on reform of the international monetary system and the other on development issues, state media reported.

Developing nations complain that rich nations dominate organisations such as the World Bank and the International Monetary Fund – both of which participate in the G20 – and that those institutions have failed to fully address the structural problems of both wealthy countries and the least developed.

The G20 includes the Group of Seven industrialised nations, plus the European Union, China, Argentina, Brazil, Russia, India, Australia, Mexico, South Korea, Indonesia, Saudi Arabia, South Africa and Turkey.

Source: AFP

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