Apec dodges issue of yuan weakness
November 13, 2009
By Shamim Adam and Daniel Ten Kate Singapore
Pacific Rim finance ministers praised China's part in reviving global economic growth and dodged a discussion on whether the yuan's weakness was damaging its neighbours' exports.
China had "played a major role in helping contribute to recovery", US Treasury Secretary Timothy Geithner said after meeting with his counterparts in Singapore yesterday. "The broad thrust of reforms this government laid out provided a very promising basis for helping underpin a more solid foundation for growth."
The show of support from the 21-member Asia-Pacific Economic Co-operation (Apec) group may ease pressure on China to abandon its currency's fix to the dollar, maintained since July last year.
Analysts say a stronger yuan will help shift the third-largest economy toward domestic demand and away from a reliance on exports.
"There's no silver bullet," Singapore Finance Minister Tharman Shanmugaratnam said. "None of us around the table were calling for or thought it advisable to have any significant realignment."
Emergency stimulus measures had prevented a deeper global recession and policy makers would remain vigilant until the recovery "gains traction", the ministers said.
"We will undertake monetary policies consistent with price stability in the context of market-oriented exchange rates that reflect underlying economic fundamentals."
Alvin Liew, an economist at Standard Chartered, said: "Nobody will be hoping for a big bang approach where you get a significant appreciation of the Chinese currency."
Other Apec members also oversee some form of control on their currencies. Malaysia, Singapore and Vietnam manage their exchange rates against a basket of other currencies, while Hong Kong's dollar is pegged to its US counterpart. Taiwan, South Korea and Thailand regularly buy and sell their currencies in market interventions.
China had no plans to alter its policy of step-by-step changes in the value of its currency, Assistant Finance Minister Zhu Guangyao said at the ministers' press conference.
"What's more important is that the Chinese economy is strong and robust," Thai Finance Minister Korn Chatikavanij said.
Policymakers are moving to unwind some of the emergency steps they took to counter the world recession after cutting interest rates and outlaying more than $2 trillion (R14.8 trillion) in government expenditure. The Group of 20 nations last week outlined a timetable to rebalance the global economy, mapping exit strategies from the stimulus.
At their last meeting in Peru in November last year, Apec leaders vowed to "act quickly" and take "extraordinary" steps to fight the crisis, including slashing interest rates to record lows, spending billions of dollars to rescue banks and increasing public outlays as the slump deepened.
A year on, Apec economies were at various stages of recovery and would have differing time frames to remove stimulus, Singapore Trade Minister Lim Hng Kiang said this week. Asia, which was forecast to emerge faster from the global recession than other regions, needed to study exit strategies "carefully" to avoid more disruptions. - Bloomberg
|
|
