The Group of Seven’s united campaign for faster yuan gains means China risks increasing tensions with major trading partners as U.S. Treasury Secretary Henry Paulson and European Central Bank President Jean-Claude Trichet prepare to visit Beijing.
Paulson, Trichet and the rest of the G-7 called on Oct. 19 for an “accelerated appreciation,” the toughest language in four years. They will deliver that message when Trichet leads a European delegation next month, and Paulson follows in December.
China’s record trade surplus and the fastest economic growth in more than a decade prompted European and Canadian officials to join the U.S. in branding the yuan undervalued. The pressure may lead traders to increase bets that China will give some ground and let the currency climb. [Full Text]