G20 Drops China-Sensitive Plaudits on Yuan Reform
World leaders looked set to ditch plans to welcome Beijing’s shift toward greater exchange rate flexibility at a G20 summit on Sunday, financial policy sources said, highlighting China’s sensitivity over the issue.
Negotiators had hoped a statement to be signed by the leaders in Canada could include a line welcoming last week’s announcement that Beijing was ending a de facto peg that has hooked the yuan to the U.S. dollar for much of the past two years.
Andrei Bokarev, Russia’s deputy sherpa and a finance ministry official, said most Group of 20 members welcomed China’s plans to adopt a more flexible yuan but any reference to it was removed, at China’s request, from the communique to be published at the end of the meeting.
“The majority of the members of the G20 welcomed the plans of the government of China on introducing a floating yuan rate,” Bokarev told reporters, “But in the final communique this phrase will not be in there at the request of the Chinese side.”
The AFP reports on President Obama’s “challenge” to China from the G20:
US President Barack Obama has launched a stern challenge to China, using the big stage of the G20 summit of world powers to demand Beijing’s help in rebalancing the world economy.
The G20 leaders, representing both the world’s established economic giants and its dynamic emerging powers, agreed a package of measures to cut deficits, stimulate growth and return stability to financial markets.
But Obama went further than the carefully worded joint statement, using his post-summit press conference to remind China that the United States expects it to allow its currency to rise and to reduce its huge trade surplus.
“My expectation is that they’re going to be serious about the policy that they themselves have announced,” Obama said, welcoming China’s announcement last week that it will allow more flexibility in the yuan exchange rate.
Read more about China’s currency revaluation and the G20 summit, via CDT.