HONOLULU (AFP) ― The United States on Thursday urged China to allow the yuan to appreciate faster, saying stronger Asian currencies were vital to restoring global financial stability amid a European debt crisis.
U.S. Treasury Secretary Tim Geithner said after chairing a meeting of Asia Pacific finance ministers that a main focus of their talks was on how to help strengthen global economic growth and make it more balanced.
“This process of rebalancing will be aided by exchange rate policies in China and other Asian economies that allow their currencies to adjust in response to market forces,” he told reporters after the meeting.
“China, in particular, must continue to allow its currency to strengthen, and China has acknowledged the importance of faster exchange rate adjustment.”
The gathering of finance ministers is part of a series of meetings leading to a summit this weekend of the leaders of the Asia Pacific Economic Cooperation (APEC) forum in Honolulu.
Geithner said Europe faced “very tough challenges” in dealing with the debt crisis, which is now threatening Italy, while the United States is also enduring its own economic problems.
But Asia’s export-reliant economies ― whose key markets are the U.S. and Europe ― should also do their part to help shore up the global economy by boosting domestic consumption as a driver of economic growth, Geithner said.
Asian nations, especially China, the world’s second largest economy, should also allow their currencies to strengthen against the dollar to help reduce trade imbalances, he said.
Washington has alleged that China is deliberately managing the appreciation of the yuan instead of allowing market forces to determine the exchange rate.
A weaker yuan has made Chinese exports cheaper in the international market, leading to major trade imbalances with its trading partners such as the United States.
Geithner said Thursday that according to most independent market analysts the yuan was “still significantly undervalued.”
“It is better for China, it’s better for the world and the United States if China allows its currency to appreciate more rapidly,” he said.
In a joint statement issued after their meeting, the finance ministers said they were committed to “more market-determined exchange rate systems.”
They also committed to move toward more flexible exchange rates “to reflect underlying economic fundamentals, avoid persistent exchange rate misalignments, and refrain from competitive devaluation of currencies.”
