Seoul (AsiaNews) – Chinese President Hu told his US counterpart Barack Obama that reform of the yuan exchange-rate regime will be an “incremental’ process” that required a “sound” global economy. Any hope for a deal at the G20 summit seems gone. A member of the German delegation said that Beijing was the main obstacle to a compromise.
However, for Hu, China has been responsible in its currency policy. For example, China's decision in June to increase the yuan's flexibility was not an easy one, as the domestic economy was facing complicated challenges at the time, China Central Television reported Hu as saying.
For months, Beijing and Washington have been at loggerheads over the value of the yuan.
In June of this year, China ended the yuan's de facto peg to the US dollar, a policy China adopted in July 2008 during the global financial crisis.
In the past few months, the yuan has gained against the dollar, but at a slow pace drawing criticism from the United States.
Many in the US Congress believe that China’s currency policy has kept the yuan lower by 20 to 30 per cent, giving Chinese companies an unfair advantage on foreign markets, and inflating the US trade deficit.
However, pressure to get China to change has failed. Any sudden change in the yuan’s value would boost unemployment, cause social unrest, and attract speculative capital that could distort China’s economic growth, Chinese Prime Minister Wen Jiabao said.
China has also accused the US of unfair policies. The Fed’s quantitative easing last week has been described as nothing more than masked currency manipulation that the United States must explain, according to many in Beijing.