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Hu calls for 'responsible' US policies

world Updated: Nov 12, 2010 12:38 IST
Hu Jintao

Chinese President Hu Jintao called on Friday on the United States to adopt "responsible policies" and maintain a stable dollar, turning the tables after US criticism of Beijing's currency and trade policies.

Hu made the remarks on the final day of a two-day summit of the world's 20 largest rich and emerging economies in Seoul which has been dominated by a Chinese-US row over use of exchange rates as a weapon of national enrichment.

"Major reserve-currency economies must carry out responsible policies and keep their exchange rates relatively stable," Hu said, according to the text of his G-20 speech from the Xinhua news agency, which a Chinese official confirmed.

In the finger-pointing over global economic instability, China and the United States often refrain from naming each other directly, but the reference to the "major reserve-currency economy" indicates America and the dollar.

China has been the target of US criticism that it keeps its exchange rate too low. But Beijing -- averse to any limits on its booming exports -- insists that exchange rate reform must happen at its own pace.

The Federal Reserve's decision to pump 600 billion dollars into the American economy, resulting in a lower dollar, has exposed Washington to Chinese criticism that it, too, is now keeping its exchange rate artificially low.

The fractious Group of 20 was battling over a plan to tackle imbalances in world trade between surplus and deficit nations, and Hu said that cooperation was tough.

"The individual countries have different economic objectives, and macroeconomic coordination has become more difficult," he said.

Hu, who presides over the world's second-largest economy and its largest exporter, painted a bleak picture of the global outlook.

"The international financial markets are volatile, the fluctuation in the major currencies is large, prices of commodities are high, and there is a clear rise in protectionism," he said. "We must persist in opposing protectionism in any form and dismantle existing protectionist measures."

Hu said the international community should "champion open trade and promote coordinated development", as well as work to reform the global financial system and "narrow the development gap".

US officials said President Barack Obama, fresh from an election drubbing by Republicans campaigning on high unemployment, spent most of a meeting with Hu on Thursday discussing currency issues.

A senior US official at the summit said the United States was "very encouraged" by China's progress in allowing the yuan to rise, despite "heat" and public rows with Beijing over exchange rates.

The official, seeking to build bridges at the bad-tempered Seoul summit, said Beijing was also moving towards addressing some of Washington's other concerns, including on trade and intellectual property issues.

"I think that if you look behind, look past, some of the heat we have seen, and you look at what is happening in our very important relations with China, I am very encouraged by the progress we have seen," the official said.

"We have seen them move to let the exchange rate appreciate in response to market forces -- at an accelerated rate since September," the official said on condition of anonymity. "China recognises that is very important to its own growth in the future."

However, the Chinese currency has appreciated only by about two percent against the dollar since Beijing pledged in June to allow it to trade more freely.