China needs ‘sound’ world economy for forex reform


SEOUL: Chinese President Hu Jintao told US President Barack Obama Thursday that Beijing has an “unswerving” resolve to pursue currency reform, but needs a sound world economy to do it, an official said.
“President Hu also stressed that China’s resolve to push forward foreign exchange reform is unswerving,” foreign ministry spokesman Ma Zhaoxu said after Hu and Obama met just prior to the start of a G20 summit in South Korean capital, Seoul.
“The reform will need a very sound external environment and can only be implemented in an incremental process,” Ma told reporters, throwing the onus on the US to avoid any instability in the world economy.
According to Chinese television news, Hu also told Obama that Beijing was “paying attention to the quantitative easing policy” — a 600-billion-dollar stimulus by the Federal Reserve that has sparked worldwide concern. “US policies should take into account the interests of emerging market countries and developing countries,” Hu said, according to the bulletin on state TV.
US officials said the 80-minute bilateral meeting was dominated by divisions over exchange rate policy and the need to improve the atmosphere of the broader Sino-US relationship ahead of a visit by Hu to Washington in January.
Washington has become increasingly impatient with China’s so-far limited efforts to allow the value of its currency to rise. US officials say the yuan’s value is kept artificially low to boost Chinese exports.
But Beijing has hit back by leading global criticism of the Fed’s renewal of quantitative easing, arguing Washington is risking the global recovery in its own search for growth by flooding vulnerable emerging economies with new money.