A UN agency urged China to reject Western pressure to float its currency, defending Beijing as a leader in stimulating domestic demand and the global economy.
In a policy brief, the UN Conference on Trade and Development (UNCTAD) said on Tuesday, March 16 market forces have caused "currency chaos" in the world and that international control of exchange rates would be better.
The burden of rebalancing the global economy should not be put on a single country and its currency, the UN agency said.
Leaving currencies to irrational market forces "will not help rebalance the global economy," and a Chinese decision in this direction would risk an economic shock akin to the one Japan suffered in the 1990s, it said. That, in turn, could destabilize the entire world economy.
"Expecting that China will leave its exchange rate to the mercy of totally unreliable markets and risk a Japan-like appreciation shock ignores the importance of its domestic and external stability for the region and for the globe," the UN agency said.
A loss in China's competitiveness as a result would produce dangerous consequences for the world, it said.