Bush suggests yuan float to help balance trade news
05 September 2007

Mumbai: US President George W. Bush has suggested that the China float its currency to help balance trade with the United States. While China had allowed the yuan to appreciate gradually in the past two years, it still remains tightly managed, he said.

"We still have got a huge trade deficit with China, which then causes us to want to work with them to let their currency float. I think that would be helpful in terms of adjusting trade balances," he told the Asia Pacific Economic Cooperation forum in Sydney, Australia.

The yuan had appreciated 7.3 per cent since it was upvalued by 2.1 per cent and taken off the dollar peg in July 2005.

But critics, mostly US, say it is significantly undervalued, giving Chinese exporters an unfair advantage in global markets.

US imports from China totalled $121 billion in the first five months of the current year and are on track to surpass last year''s record of $287.8 billion when the US trade deficit with China also reached a record $233 billion.

The Chinese commerce ministry said in a recent report that China could well become the third-largest market for US exports by the end of the year.

Bush, who will meet Chinese president Hu Jintao at the APEC summit, also said Beijing needed to play a part in defining global goals on climate change.

"In order for there to be an effective climate change policy, China needs to be at the table. And in order to get China at the table they have to be a part of defining the goals," Bush told a joint news conference with Australian Prime Minister John Howard.

Meanwhile, the 21-member APEC forum has said "no" to India and a slew of other countries that want to join, for now. "No new members," Japanese ministry of foreign affairs spokesman Mitsuo Sakaba said when asked.

Expansion of the grouping is being delayed, at least until 2010, according to a draft of a statement to be released by APEC leaders.

The decision leaves pending membership requests from a dozen countries, including India, Mongolia and Colombia. The backlog is due in part to a 10-year moratorium on new members APEC imposed in 1997 that was supposed to expire this year.

The draft statement did not say if the moratorium would be formally extended. The leaders could decide to change the terms at their weekend meeting.

The new members were being put off because the group, in the draft''s words, does not want expansion to slow momentum toward "regional integration and open economies."

But the delay also comes from APEC''s complicated politics, sources said. The group has tried to strike a balance between rich and poor countries, Asian and American ones.

India''s presence would be a big boost for the Asian camp and its bid is supported by the United States. But rival China does not want to see its rising influence diluted.
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Bush suggests yuan float to help balance trade