admineconomies to work together to put things back on track.
It would be unadvisable and unhelpful to squander valuable time at the summit squeezing China over its currency policies.
Bearing down on the yuan will neither cure the maladies of the struggling countries nor shore up the teetering world economy.
The Chinese currency has nothing to do with the sprawling debt crisis in the eurozone, which stemmed from a mismatch between the bloc’s monetary policies and financial practices as well as a lack of financial regulation.
Nor is the Chinese currency the initiator of trade imbalances in international trade, particularly that between China and the United States.
The some 30-percent appreciation of the yuan’s value against the greenback during the past six years did not diminish the US trade deficit with China.
Meanwhile, even if the yuan appreciates more and makes Chinese products more costly in US markets, the US trade deficit will not disappear, because rational consumers will simply turn to imports from other low-cost countries.
Among the real culprits behind the US-China trade imbalances are Washington’s restrictions on high-tech exports to China. The same is also true in the trade imbalances between China and other developed economies.
Finding a scapegoat is much easier than confronting the problem head on. But shunning difficult decision-making for now will only lead to more difficult decision-making in the future.
It would have been more helpful to the US economy if the US Senate had stayed focused on the country’s real problems rather than toying with an irrelevant currency bill that is obviously aimed at China and the yuan.
G20 finance ministers and central bankers agreed last month in Paris that different countries have to adopt different policies to overcome the world economic slowdown: implementing financial reforms for the developed countries and keeping growth for the developing ones.
China is now a key engine of world economic growth. As China’s economic growth remains heavily dependent on exports, an overly strong yuan will depress the country’s economic growth and thus hurt the world economy.
And it is just ridiculous to call for a boycott of Chinese exports.
In fact, China has honoured its promise to reform the exchange rate regime of its currency by tying the value of the yuan more closely to market demand. The process will continue in an incremental and prudent manner to maintain economic and financial stability both in China and beyond.
For its part, the G20, which represents 90 percent of world GDP and 80 percent of global trade volume, should deliver on its pledge to curb trade protectionism and foster a freer and more convenient trade and investment environment.
Since the G20 came into being, improving the international financial system has been one of its most important tasks because recent history has shown that a single reserve currency may not guarantee a stable financial environment.
The world needs a diversified reserve currency system, which then necessitates effective reforms. For starters, improved issuance and control policies should be in place to maintain a relatively stable exchange rate of a major reserve currency.
China’s economic boom cannot be sustained without a thriving world economy.
That’s why Beijing has been repeatedly calling on all G20 members to pick up the all-in-the-same-boat spirit and work together to ride out the tough times and stride toward common development. – Xinhua.
Online Reporter