US calls for freer yuan ahead of G20 meet
Reuters, Melbourne
The United States called on China on Friday to allow its currency to trade more flexibly as the world's biggest economic powers gathered for talks on global imbalances and a range of pressing economic concerns.US Deputy Treasury Secretary Robert Kimmitt, in a briefing ahead of Group of 20 (G20) talks due to begin on Saturday, said the United States also needs to do its part to fix trade imbalances, saying it needed to raise savings rates. But Kimmitt painted an otherwise upbeat picture of the U.S. economy at a time when officials from many other countries, which depend on the United States as a vital export market, have voiced increasing concern about a possible slowdown in growth. "Let me say this about the U.S. economy, I think it is solid in the near and mid-term. There has been some slowdown because of the housing market but inflation is low and job creation is good," Kimmitt told reporters. Finance ministers and central bankers from the G20 countries were due to hold talks on a wide range of economic issues, including the Chinese yuan, energy and minerals security and the need for more progress on trade liberalization. Kimmitt said Washington's contribution to evening global macroeconomic imbalances would be to encourage Americans to increase their savings while the government tackled its trade deficit with the rest of the world. But China, which has allowed only a slow and limited increase in the yuan's value since Beijing unshackled the currency from the U.S. dollar in July 2005, needed to move more swiftly, Kimmitt said. "We believe the Chinese need to accelerate their moves on foreign exchange rates," he said. "I will be meeting with the Chinese central bank governor and I expect that issue (foreign exchange flexibility) will come up." Treasurer Peter Costello, from host country Australia, said the inflation outlook and its implications for monetary policy around the world would be a major topic for the G20, which draws together industrialized and developing countries. "The global economy will be a key issue. Global inflation prospects will be discussed, the monetary policy response -- not just in Australia but around the world -- where central bankers around the world see monetary policy going," Costello told reporters.
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