The US will push China to untie its currency from the dollar as soon as possible, a top US Treasury Department official said on Friday ahead of the Group of Seven (G-7) finance ministers meeting.
"Our discussions with China have been good and candid," said John Taylor, the US Treasury Department's undersecretary for international affairs. "We know they are taking steps toward a more flexible exchange rate."
Taylor, who is standing in for US Treasury Secretary John Snow, was to meet with Chinese economic policymakers on Friday. He said the US would like to see China adopt a flexible rate "as quickly as possible."
People's Bank of China Governor Zhou Xiaochuan (周小川), however, hinted in an address to business and government leaders that China will be asking for more time.
Zhou did not address the issue directly, but said China needed more time to reform its economy -- a position repeated often by Chinese officials in the run-up to the meeting of finance ministers from the leading industrialized nations, where China has guest status.
Chinese leaders say they eventually plan to let the yuan trade freely but argue that for now, keeping the currency stable is the best option for the Chinese economy -- and by extension, the world economy.
"We know that reforming the financial sector takes time," Zhou said on Friday. "We need time to educate a new generation of bankers."
China's pegging of the yuan to the US currency has supercharged its exports as the dollar has declined -- dealing a double blow to Japanese and European companies already facing competition in international markets from now-cheaper US products. Critics contend the yuan is undervalued by as much as 40 percent.
Several attendees are expected to highlight the US' huge deficits, which have been a drag on the dollar. The euro rose from about US$1.20 in September to a high of US$1.3667 at the end of December, and the dollar tumbled from about 111 yen in September to 102 toward the end of the year. The dollar has since recovered a little.
European Central Bank president Jean-Claude Trichet told the conference it was unacceptable for developed countries to run long-term current account deficits.
"The industrialized world as a whole is in deficit, there is a current account deficit, and there is no offsetting of the US current account deficit by the other industrialized countries," Trichet said. "That of course means that we are structurally asking the rest of the world to finance us ... It doesn't seem to me that this is an acceptable and sustainable long-term feature of the present functioning of the global economy."
The US trade and budget deficits and the purchase of large US dollar reserves by Asian countries were combining to cause "global imbalances," said Bank of England Governor Mervyn King.
US Federal Reserve Chairman Alan Greenspan told the conference that a variety of factors from a weaker dollar to tougher budget discipline in Congress may finally start to restrain the explosive growth in the US trade deficit.
A weaker dollar should narrow the deficit by making foreign goods more expensive to US consumers and US exports cheaper for foreigners, Greenspan said.
Tropical Storm Gaemi strengthened into a typhoon at 2pm yesterday, and could make landfall in Yilan County tomorrow, the Central Weather Administration (CWA) said yesterday. The agency was scheduled to issue a sea warning at 11:30pm yesterday, and could issue a land warning later today. Gaemi was moving north-northwest at 4kph, carrying maximum sustained winds near its center of up to 118.8kph and gusts of 154.8kph. The circumference is forecast to reach eastern Taiwan tomorrow morning, with the center making landfall in Yilan County later that night before departing from the north coast, CWA weather forecaster Kuan Shin-ping (官欣平) said yesterday. Uncertainty remains and
SEA WARNING LIKELY: The storm, named Gaemi, could become a moderate typhoon on Wednesday or Thursday, with the Taipei City Government preparing for flooding A tropical depression east of the Philippines developed into a tropical storm named Gaemi at 2pm yesterday, and was moving toward eastern Taiwan, the Central Weather Administration (CWA) said. Gaemi could begin to affect Taiwan proper on Tuesday, lasting until Friday, and could develop into a moderate typhoon on Wednesday or Thursday, it said. A sea warning for Gaemi could be issued as early as Tuesday morning, it added. Gaemi, the third tropical storm in the Pacific Ocean this typhoon season, is projected to begin moving northwest today, and be closest to Taiwan on Wednesday or Thursday, the agency said. Today, there would likely
DISRUPTIONS: The high-speed rail is to operate as normal, while several airlines either canceled flights or announced early departures or late arrivals Schools and offices in 15 cities and counties are to be closed today due to Typhoon Gaemi, local governments announced last night. The 15 are: Taipei, New Taipei City, Taoyuan, Tainan, Keelung, Hsinchu and Kaohsiung, as well as Yilan, Hualien, Hsinchu, Miaoli, Chiayi, Pingtung, Penghu and Lienchiang counties. People should brace for torrential rainfall brought by the storm, with its center forecast to make landfall on the east coast between tonight and tomorrow morning, the Central Weather Administration (CWA) said. The agency issued a sea warning for the typhoon at 11:30pm on Monday, followed by a land warning at 11:30am yesterday. As of
CASUALTY: A 70-year-old woman was killed by a falling tree in Kaohsiung as the premier warned all government agencies to remain on high alert for the next 24 hours Schools and offices nationwide are to be closed for a second day today as Typhoon Gaemi crosses over the nation, bringing torrential rain and whipping winds. Gaemi was forecast to make landfall late last night. From Tuesday night, its outer band brought substantial rainfall and strong winds to the nation. As of 6:15pm last night, the typhoon’s center was 20km southeast of Hualien County, Central Weather Administration (CWA) data showed. It was moving at 19kph and had a radius of 250km. As of 3pm yesterday, one woman had died, while 58 people were injured, the Central Emergency Operation Center said. The 70-year-old