APEC ends amid rows over the yuan and a proposal for transpacific free trade
The meeting of Asia-Pacific leaders ends with an agreement to create the largest trading zone in the world. Obama slaps Beijing for its undervalued currency.
Honolulu (AsiaNews) – The ‘yuan war’ continues between Washington and Beijing over the revaluation of the Chinese currency. US President Barack Obama has said that China has not done enough in that direction. His Chinese counterpart, Hu Jintao, countered arguing that the “yuan appreciation could not solve the problems the US is facing”.
Speaking on the sidelines of the APEC summit in Hawaii, the US leader said that the “slight improvement” to the value of the Chinese currency are not enough and that Beijing must do more.
China pushed back, saying that although the yuan’s rise was substantial, a large appreciation in the currency would not solve US problems. Instead, it would continue to appreciate its currency but only in a gradual manner.
The issue is an important one. The value of the yuan shapes the direct cost of Chinese labour and gives Beijing a direct advantage in exports. This way, it penalises US workers and creates a trade imbalance between the two nations. For some Republican congressmen, it is akin to piracy.
However, the two economies are so intertwined that an abrupt break appears impossible. What is more, Beijing holds a huge portion of US debt.
Aware of the situation, Obama stressed the need to cooperate in finding solutions that can be shared in order to promote mutually advantageous growth.
The US president did nevertheless achieve one goal, namely the establishment of a Trans-Pacific Partnership (TPP) that would create the largest free trade area in the world. After Japan, Canada and Mexico said they would join talks to remove trade barriers.
Such a free trade area would have 800 million consumers and almost 40 per cent of the world economy and would be largest trading zone in the world, bigger that the European Union, which is responsible for only one quarter of the world’s wealth. The final goal would be a “seamless regional economy”.