Business

Monday November 16, 2009

China, US spar over currencies Obama faces tricky talks during China visit


SINGAPORE: The United States and China sparred over exchange rates at a meeting of Asia Pacific leaders yesterday, pointing to tricky talks ahead for President Barack Obama when he flies to China to address economic tensions.

The discord surfaced at a summit of the Asia Pacific Economic Cooperation (Apec) forum in Singapore when a reference to “market-oriented exchange rates” was cut from a communique issued at the end of two days of talks. An Apec delegation official said Washington and Beijing could not agree on the wording.

That underscored strains likely to feature when Obama flies to Shanghai yesterday following moves by Washington to slap duties on various Chinese-made products and a growing drumbeat of pressure on Beijing to let its yuan currency strengthen.

Chinese officials have grown testy about the pressure over the yuan. Chinese banking regulator Liu Mingkang told a forum in Beijing yesterday that ultra-low interest rates in the United States were fuelling speculation in overseas asset markets and threatened the global economic recovery.

Obama pledged on Saturday to deepen dialogue with China rather than seek to contain the rising power, which is set to overtake Japan next year as the world’s second largest economy.

But issues ranging from the yuan and trade tensions to human rights could complicate what many regard as the most important relationship of the 21st century.

“With regards to trade, this is a difficult time for the US-China relationship,” said Derek Scissors, trade economist at the conservative Heritage Foundation in Washington.

“The signs are actually getting worse instead of better.” Chinese President Hu Jintao ignored the yuan issue in several speeches at Apec and focused instead on what he called “unreasonable” trade restrictions on developing countries.

An earlier draft pledged Apec’s 21 members to maintain “market-oriented exchange rates that reflect underlying economic fundamentals.”

That statement had been agreed at a meeting of Apec finance ministers on Thursday, including China, although it made no reference to the yuan.

Washington says an undervalued yuan is contributing to imbalances between the United States and the world’s third-biggest economy. China is pushing for US recognition as a market economy and concessions on trade cases that would make it harder for Washington to take action against Chinese products. — Reuters


For more on Apec meeting and other news from The Straits Times, a partner with The Star in the Asia News Network, click here.


Latest business news from AP-Wire

  • E-mail this story
  • Print this story