US fiscal policies questioned by China
By Zhang Fengming |
November 6, 2010, Saturday
|
Print Edition
Print Edition
CHINA yesterday spoke out against US policies ahead of the G20 Summit, questioning the Federal Reserve's new quantitative easing and dismissing a US call to impose current account targets to push for yuan appreciation.
Chinese Vice Foreign Minister Cui Tiankai rejected a US proposal to push for targets to shrink current account gaps and said China would not accept any attempt to single out the yuan's exchange rate at the G20 Summit in South Korea next week.
"The artificial setting of a numerical target cannot but remind us of the days of a planned economy," Cui said. "If any country or any individual sets a target for China on the appreciation of the yuan, it requires us to manipulate the exchange rate and, for sure, we will not bow to that."
US Treasury Secretary Timothy Geithner suggested last month that G20 members assign a specific limit for their current account surpluses or deficits - 4 percent of gross domestic product.
Targeting China's current account surplus is deemed an indirect way for the US to push China into making its local currency more valuable.
Cui also spoke on Wednesday's decision by the Fed committed to buy US$600 billion in government bonds, the first high-level response from China to the policy
The near-zero US interest rates and a weak US dollar forecast is expected to push liquidity into Asian countries, disturbing their economies.
"Many countries are worried about the impact of the policy on their economies," Cui said. "It would be appropriate for someone to step forward and give us an explanation, otherwise international confidence in the global economy might be hurt."
China is expected to raise its interest rates one more time this year and more rises are expected next year as inflation prioritizes monetary policy, economists said.
Chinese Vice Foreign Minister Cui Tiankai rejected a US proposal to push for targets to shrink current account gaps and said China would not accept any attempt to single out the yuan's exchange rate at the G20 Summit in South Korea next week.
"The artificial setting of a numerical target cannot but remind us of the days of a planned economy," Cui said. "If any country or any individual sets a target for China on the appreciation of the yuan, it requires us to manipulate the exchange rate and, for sure, we will not bow to that."
US Treasury Secretary Timothy Geithner suggested last month that G20 members assign a specific limit for their current account surpluses or deficits - 4 percent of gross domestic product.
Targeting China's current account surplus is deemed an indirect way for the US to push China into making its local currency more valuable.
Cui also spoke on Wednesday's decision by the Fed committed to buy US$600 billion in government bonds, the first high-level response from China to the policy
The near-zero US interest rates and a weak US dollar forecast is expected to push liquidity into Asian countries, disturbing their economies.
"Many countries are worried about the impact of the policy on their economies," Cui said. "It would be appropriate for someone to step forward and give us an explanation, otherwise international confidence in the global economy might be hurt."
China is expected to raise its interest rates one more time this year and more rises are expected next year as inflation prioritizes monetary policy, economists said.
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