Voice from Sydney

Sydney Morning Herald: Wen defiant on yuan policy 15/03

The Chinese Premier, Wen Jiabao, has promised to "level the playing field" for foreign businesses in China, following the imbroglio over Google and Rio Tinto's Stern Hu.

But he made no apologies for re-pegging the Chinese currency and ratcheted up his counter-critique of US policies, in his annual news conference to mark the end of the National People's Congress.

"I don't think the yuan is undervalued," he said, adding that US dollar volatility was a "big" concern and he was "still worried" about the security of China's US Treasury holdings.

Mr. Wen said it was up to the US to fix the US-China relationship because the Americans had broken it. He cited President Barack Obama's decision to meet the Dalai Lama and to sell weapons to Taiwan.

And according to Mr. Wen, China's abrasive diplomacy at Copenhagen in December was in response to the "shock" of not being invited to a small leaders' group meeting.

The Australian: Beijing warns of tough times 15/03

The Prime Minister pointedly highlighted - as he wrapped up the country's once-a-year, 10-day parliamentary session, the National People's Congress - how surging commodity prices had been at the centre of disputes with Australia.

"The unemployment rate of the world's main economy is still high, some countries' debt crises are still deepening, and the world's commodity prices and exchange rates are not stable, which are most likely to become the cause of any setback in the economic recovery," Mr. Wen said yesterday in Beijing's Great Hall of the People.

Mr. Wen is now attempting the delicate balancing act of withdrawing the massive stimulus of government funding and state-sponsored bank lending which totalled 12 trillion yuan ($1.92 trillion) last year while trying to fend off inflation and proceed with structural economic reform. As part of its efforts, China is also trying to marshall the forces of its steel sector to fend off a massive hike in iron ore prices that could now be as much as 90 per cent.

China's and Australia's economies have become more intertwined in recent years: the country is now our largest trading partner with two-way trade surging to $83 billion in the year ending last June 30, and in December it passed Japan as our largest export market.

Any trouble in China's economy would quickly resonate in Australia.