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DJ Japan Official: G7 Thinks China Forex Reform 'A Bit Slow'(Comtex Finance Via Thomson Dialog NewsEdge)WASHINGTON, Apr 22, 2006 (Dow Jones Commodities News Select via Comtex) --The Group of Seven finance leaders' statement calling for greater exchange rate flexibility in China reflects their view that Beijing should move faster in reforming its currency system, a senior Japanese Ministry of Finance official said Friday. "The change in the statement's wording means we feel that the pace (of China's currency reform) is a bit slow," the official said. "The statement implies that China should do more" in managing its currency system more flexibly, he said. The G7 finance ministers and central bankers, in a statement issued following their meeting at the sidelines of the International Monetary Fund-World Bank spring meetings in Washington, sought to turn up pressure on Beijing to allow the yuan to trade more freely on foreign currency markets. The ministers urged China to act to reduce its large and growing trade surpluses. "We underscored that global economic adjustment is a shared responsibility," the statement said. "Greater exchange rate flexibility is desirable in emerging economies with large current account surpluses, especially in China, for necessary adjustments to occur." Though the G7 has previously noted China's reforms to its currency regime announced last July, it is unusual for ministers to be critical of individual countries in the G7 statement. China manages the value of its currency against the U.S. dollar with a network of capital controls and heavy intervention in the currency market. For almost four years, the U.S. has said China must allow the market to have more influence on the currency. But since a 2.1% one-off appreciation last summer, the yuan has risen just around 1.0% against the dollar. Forex Adjustment Of Global Imbalances Won't Last Long The Japanese MOF official, however, said attempts to curb global imbalances through foreign exchange adjustment alone "won't last long." What's more important in the long-term perspective is for China to open up its markets and for advanced nations to achieve higher economic growth so they can buy more goods from China, he said. The official also said the G7 statement hasn't exactly singled out China in calling for greater currency flexibility. "The more proper view is that we have broadened our call for currency flexibility" from just China to emerging economies overall, he said. In the previous statement issued in London in December, the G7 members didn't refer to emerging nations and called only for "further flexible implementation of China's currency system." Still, the G7 statement's reference to China reflects the G7 members' desire for the nation to play a larger role in efforts to tackle global imbalances, the official said. "We want China to become more responsible over global economic flows and not just focus on domestic macroeconomic affairs," he said. Senior Chinese officials, in a working dinner held after the G7 meeting, said the nation is moving toward a more flexible exchange rate system, although exchange rates can't be made to move so easily, according to the Japanese MOF official. China's economic strength seems exaggerated, and it would take longer for China to adjust its currency system compared with advanced nations, the Chinese delegation was quoted as saying by the Japanese official. The G7 members held a working dinner session after their meeting, which was attended by delegates from China, Russia, Saudi Arabia and the United Arab Emirates. -By Leika Kihara, Dow Jones Newswires; 813-5255-2929; leika.kiharadowjones.com (END) Dow Jones Newswires 04-22-06 0040ET |