US raps China on currency devaluation

But they did not act as assertively as President Obama had hoped, and he left little doubt that he considered one country, China, the primary source of the problem.

Scrapping a longtime practice of speaking with diplomatic caution about China’s currency policy, Obama accused Beijing of intervening aggressively to keep its currency, the renminbi, below its market value to promote exports. He said it was a mistake for nations to think that “their path to prosperity is paved simply with exports to the United States.”
“Precisely because of China’s success, it’s very important that it act in a responsible fashion internationally,” Obama said at a news conference at the conclusion of the economic summit meeting here. “And the issue of the renminbi is one that is an irritant not just to the United States, but is an irritant to a lot of China’s trading partners and those who are competing with China to sell goods around the world.”

The tougher language seems likely to add tension with China, which has already criticised the Obama administration’s decision to try to mediate territorial disputes involving China and its East and Southeast Asian neighbors. But Obama’s efforts to persuade China to act on its own, or as part of a collective commitment by big economies to address trade imbalances, have yielded only incremental steps, raising the possibility of a contentious and awkward prelude to a state visit to Washington by President Hu Jintao of China scheduled for January. Under American pressure, the leaders of the G20 economies did agree Friday to curb “persistently large imbalances” in trade, as well as saving and spending, that officials believe pose risks to global growth. The group’s communique reflected an emerging consensus that longstanding economic patterns — in particular, the United States’ consuming too much and big exporters like China and Germany consuming too little — were no longer sustainable.

Obama acknowledged the agreement “doesn’t provide an enforcement mechanism,” but said it “does give the international community the ability to monitor and see exactly what countries are doing” and “gives a mechanism to apply at least some peer pressure” on countries treating their trading partners unfairly.

President Hu said the Chinese economy would shift toward domestic consumption and that the government would make it a priority to increase domestic demand, as the US and many economists have urged.