People's Bank of China Governor Zhou Xiaochuan said his country is adjusting
its currency and taking steps to reduce a trade surplus that tripled to a record
$102 billion last year.
Zhou, in a statement a day after a meeting of the Group of Seven in
Washington, said developed countries must also do their part to remedy lopsided
global flows of goods and investment by making their exports more competitive.
China ``is adopting further measures to expand domestic demand, encourage
consumption, open its markets, improve its exchange-rate regime, and restructure
trade,'' Zhou said. Developed nations should ``create job opportunities and
export advantages to improve their competitiveness.''
Finance ministers and central bankers from the Group of Seven yesterday
called on China and other Asian nations to allow their currencies to appreciate.
Stronger Asian currencies and less reliance on exports for growth can help
reduce imbalances that jeopardize a favorable outlook for global economic
growth, the officials said.
Zhou took issue with Group of Seven efforts to enhance the IMF's scrutiny of
the currency policies of its members. ``Each country is entitled to choose an
exchange-rate system consistent with its own economic development,'' he said.
The G-7 gathering followed a meeting between President George W. Bush and
Chinese President Hu Jintao at the White House that did little to narrow
differences over China's managed exchange-rate system.
Hu said after the meeting that the government ``will continue to make
adjustments'' in its currency system. Bush said he wanted ``more appreciation.''
Export Surge
Surging exports of inexpensive toys, televisions and clothing helped China's
economy expand 10.2 percent in the first quarter from a year earlier, the
fastest pace among the world's top 20 economies.
US lawmakers argue the Chinese yuan is kept artificially weak to give
exporters an advantage, contributing to the nation's $201.6 billion trade
deficit with China last year. China's currency reserves of $875.1 billion are
the world's largest.
China ended its currency's decade-old peg to the dollar in July and revalued
it by 2.1 percent. It said the yuan would be allowed to move as much as 0.3
percent a day. Since then, the yuan has gained just 1.2 percent against the
dollar.
China will push ahead with yuan convertibility ``step by step,'' Sun Lujun,
deputy director of the Capital Account Management Department of the State
Administration of Foreign Exchange, said at a financial conference in Beijing
today.
Voting Rights
``Yuan convertibility is a systematic project and has to accommodate the
nation's macroeconomic development and financial reform,'' Sun said.
New rules announced April 13 allow domestic banks to convert their clients'
local currency to buy U.S. Treasuries and other overseas fixed-income
securities, a step toward a freely traded currency.
Zhou today also called on the International Monetary Fund to enlarge the
voting rights of Asian and other emerging economies to reflect their growing
share of the global economy.
``The fund's quota structure should reflect the changed world economic
structure,'' he said.
The US has the biggest stake in the 184-member IMF, with 17 percent. The
fund, founded in 1945, makes loans to countries as part of a program in which
the borrower agrees to change policies, such as adjusting its balance of
payments or reducing inflation.
Asian members of the fund have a combined 13 percent voting stake, yet
accounted for 19 percent of the world economy in 2004.