Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (22173)	1/25/2005 7:09:02 PM
From: RealMuLan	Read Replies (1) \| Respond to of 116555

China Reluctance Over Yuan Reform Casts Pall on G7 Tue Jan 25, 2005 04:57 PM ET By Glenn Somerville WASHINGTON (Reuters) - China's claim that it can't hurry toward currency reform struck a jarring note in U.S. business and government circles on Tuesday and dashed hopes for progress at a meeting of global finance chiefs next week. The U.S. Treasury again urged Beijing to keep moving on "this key reform" to end or ease the practice of pegging its yuan to the U.S. dollar at a rate that manufacturers complain is jeopardizing global economic stability. The statement by Li Deshui, head of China's National Bureau of Statistics, during an interview with Reuters, that China couldn't adjust the yuan now cast a pall ahead of a Group of Seven finance ministers' meeting in London Feb. 4-5. China and several other developing countries are to meet finance ministers from leading industrial powers during part of the London gathering of the G7 -- the United States, Britain, Canada, France, Germany, Italy and Japan. "The United States, and the G7, have indicated separately and collectively our support for greater flexibility in the Chinese exchange rate," U.S. Treasury spokesman Rob Nichols said. "We have urged China to move to a flexible exchange rate as soon as possible and while steps have been taken, China must make continued progress toward achieving this key reform." TAKING THEIR TIME Li's comments were noteworthy because he sits on the central bank's monetary policy committee, which has a key role in deciding interest rates and timing on any yuan policy change -- which he made clear would not happen speedily. "Can we achieve such conditions in one or two days? This requires a process," said Li. "We need a good and feasible plan, and formulating such a plan also needs time." The yuan has been pegged at 8.28 to the dollar since 1995, and has become an acute sore point since the dollar began weakening in early 2002. Europe and Japan bore the brunt as their currencies rose and exports suffered, while China prospered, protected from such currency fluctuations. "(China's yuan peg) is the biggest factor distorting global currency markets today," said Frank Vargo, vice-president of international affairs for the National Association of Manufacturers, which blames the loss of tens of thousands of U.S. industrial jobs on Chinese competition. Vargo said China spent about $200 billion last year acquiring U.S. debt securities to help maintain the peg. "It's time for this to stop and the G7 needs to wake up and act on this at their meeting next month," he said. Continued ... © Reuters 2005. All Rights Reserved. reuters.com