CHINA / National

"We're taking steps to reduce surplus"
Updated: 2006-04-23 10:01

April 22 -- People's Bank of China Governor Zhou Xiaochuan said his country is adjusting its currency and taking steps to reduce a trade surplus that tripled to a record $102 billion last year.

U.S. Treasury Secretary John Snow (R) meets Central Bank Governor of China Zhou Xiaochuan in Washington April 20, 2006.
US Treasury Secretary John Snow (R) meets Central Bank Governor of China Zhou Xiaochuan in Washington April 20, 2006. [Reuters]
Zhou, in a statement a day after a meeting of the Group of Seven in Washington, said developed countries must also do their part to remedy lopsided global flows of goods and investment by making their exports more competitive.

China "is adopting further measures to expand domestic demand, encourage consumption, open its markets, improve its exchange-rate regime, and restructure trade," Zhou said. Developed nations should "create job opportunities and export advantages to improve their competitiveness."

Finance ministers and central bankers from the Group of Seven yesterday called on China and other Asian nations to allow their currencies to appreciate. G7 officials believe stronger Asian currencies and less reliance on exports for growth are the measures to help reduce imbalances that they thought would have jeopardized a favorable outlook for global economic growth.

Zhou took issue with Group of Seven efforts to enhance the IMF's scrutiny of the currency policies of its members. ``Each country is entitled to choose an exchange-rate system consistent with its own economic development,'' he said.

The G-7 gathering followed a meeting between President George W. Bush and Chinese President Hu Jintao at the White House.

Hu said after the meeting that the government ``will continue to make adjustments'' in its currency system. Bush said he wanted ``more appreciation.''

Export Surge

Surging exports of inexpensive toys, televisions and clothing helped China's economy expand 10.2 percent in the first quarter from a year earlier, the fastest pace among the world's top 20 economies.

China, under pressure from the U.S., ended its currency's decade-old peg to the dollar in July and revalued it by 2.1 percent. It said the yuan would be allowed to move as much as 0.3 percent a day.
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