正文
Chinese finance chief says currency is slowing transforming as rich nations grumble about trade effects.
September 16 2006: 7:40 AM EDT
SINGAPORE (Reuters) -- China faced diplomatic pressure from rich countries on Saturday to let its currency rise faster to ease imbalances in trade and capital that pose one of the biggest risks to the health of the global economy.
Finance ministers and central bank chiefs of the powerful Group of Seven industrialized powers were holding a working lunch with their Chinese counterparts before they were due to start talks of their own that have been eagerly awaited by financial markets.
Canadian Finance Minister Jim Flaherty said China needed to make good on its word to let its currency, the yuan, move more freely. "Some countries, including Canada, would say there needs to be an acceleration of that process," Flaherty told Reuters.
The yuan was also on the agenda when Japanese Finance Minister Sadakazu Tanigaki held bilateral talks with U.S. Treasury Secretary Henry Paulson, who is making his G7 debut.
"We discussed issues of flexibility in emerging economies, such as the Chinese yuan," Tanigaki told reporters.
China, accused by critics of keeping the yuan artificially weak to boost its exports, staked out its position by promising to gradually unleash the yuan while refraining from offering specific commitments.
"Our policy is clear. We are gradually moving towards more flexibility," Zhou Xiaochuan, governor of the People's Bank of China, told a forum.
Zhou said China, which is growing at a 10 percent annual clip, would at some point widen the band in which the yuan, or renminbi, is allowed to trade against major currencies.
China revalued the yuan by 2.1 percent in July 2005 and cut it free from a dollar peg to float within managed bands, but since then the currency has risen only about 2 percent.
Despite the flurry of comments, one G7 policy maker cautioned against expecting a major message on exchange rates to emerge from Saturday's talks.
For one thing, Paulson, who had extensive dealings with China in his previous job as head of investment bank Goldman Sachs, believed behind-the-scenes diplomacy is likely to be more effective than public pressure in persuading Beijing to act.
The policy maker said the 12-member euro zone was also wary of endorsing any kind of statement that could be interpreted by the market as a signal to buy euros.
French Finance Minister Thierry Breton said on arrival in Singapore that the euro was "fully valued", suggesting he did not want to see its exchange rate rise further against other currencies such as the yen or the dollar.
No surprises?
The G7 meeting of finance ministers and central bank chiefs in Singapore is held in conjunction with the annual meetings of the International Monetary Fund and World Bank.
The meetings are taking place against a backdrop of the strongest burst of sustained global growth in more than 30 years.
But IMF Managing Director Rodrigo Rato warned of testing times for the world economy because of the global imbalances, the danger of inflation and deadlocked world trade talks.
"Policy makers, many of them here this weekend, need to be ready to adapt to a more challenging environment," Rato said on Friday.
Officials said the G7 would issue a strong appeal to revive the World Trade Organization's Doha Round of market-opening talks, which was suspended in July because of deep disagreements between rich and poor countries over barriers to farm trade.
British finance minister Gordon Brown, who chairs the IMF's main policy steering group, said comments by Paulson had shown a real determination on the part of the United States to try to break the impasse.
"I believe there will be a sense that the trade talks can be brought to an early conclusion," Brown told reporters.
Host country Singapore, lambasted by World Bank President Paul Wolfowitz for its "authoritarian" decision to bar 27 civil rights activists, said late on Friday that it would let 22 of them enter the city state.
Singapore's restrictions on free speech and assembly will come under the spotlight on Saturday when an opposition politician plans to defy a police ban and march to the convention center where the meetings are taking place.
September 16 2006: 7:40 AM EDT
SINGAPORE (Reuters) -- China faced diplomatic pressure from rich countries on Saturday to let its currency rise faster to ease imbalances in trade and capital that pose one of the biggest risks to the health of the global economy.
Finance ministers and central bank chiefs of the powerful Group of Seven industrialized powers were holding a working lunch with their Chinese counterparts before they were due to start talks of their own that have been eagerly awaited by financial markets.
Canadian Finance Minister Jim Flaherty said China needed to make good on its word to let its currency, the yuan, move more freely. "Some countries, including Canada, would say there needs to be an acceleration of that process," Flaherty told Reuters.
The yuan was also on the agenda when Japanese Finance Minister Sadakazu Tanigaki held bilateral talks with U.S. Treasury Secretary Henry Paulson, who is making his G7 debut.
"We discussed issues of flexibility in emerging economies, such as the Chinese yuan," Tanigaki told reporters.
China, accused by critics of keeping the yuan artificially weak to boost its exports, staked out its position by promising to gradually unleash the yuan while refraining from offering specific commitments.
"Our policy is clear. We are gradually moving towards more flexibility," Zhou Xiaochuan, governor of the People's Bank of China, told a forum.
Zhou said China, which is growing at a 10 percent annual clip, would at some point widen the band in which the yuan, or renminbi, is allowed to trade against major currencies.
China revalued the yuan by 2.1 percent in July 2005 and cut it free from a dollar peg to float within managed bands, but since then the currency has risen only about 2 percent.
Despite the flurry of comments, one G7 policy maker cautioned against expecting a major message on exchange rates to emerge from Saturday's talks.
For one thing, Paulson, who had extensive dealings with China in his previous job as head of investment bank Goldman Sachs, believed behind-the-scenes diplomacy is likely to be more effective than public pressure in persuading Beijing to act.
The policy maker said the 12-member euro zone was also wary of endorsing any kind of statement that could be interpreted by the market as a signal to buy euros.
French Finance Minister Thierry Breton said on arrival in Singapore that the euro was "fully valued", suggesting he did not want to see its exchange rate rise further against other currencies such as the yen or the dollar.
No surprises?
The G7 meeting of finance ministers and central bank chiefs in Singapore is held in conjunction with the annual meetings of the International Monetary Fund and World Bank.
The meetings are taking place against a backdrop of the strongest burst of sustained global growth in more than 30 years.
But IMF Managing Director Rodrigo Rato warned of testing times for the world economy because of the global imbalances, the danger of inflation and deadlocked world trade talks.
"Policy makers, many of them here this weekend, need to be ready to adapt to a more challenging environment," Rato said on Friday.
Officials said the G7 would issue a strong appeal to revive the World Trade Organization's Doha Round of market-opening talks, which was suspended in July because of deep disagreements between rich and poor countries over barriers to farm trade.
British finance minister Gordon Brown, who chairs the IMF's main policy steering group, said comments by Paulson had shown a real determination on the part of the United States to try to break the impasse.
"I believe there will be a sense that the trade talks can be brought to an early conclusion," Brown told reporters.
Host country Singapore, lambasted by World Bank President Paul Wolfowitz for its "authoritarian" decision to bar 27 civil rights activists, said late on Friday that it would let 22 of them enter the city state.
Singapore's restrictions on free speech and assembly will come under the spotlight on Saturday when an opposition politician plans to defy a police ban and march to the convention center where the meetings are taking place.
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