Beijing on board for a rising yuan, IMF chief says

PUBLISHED : Friday, 11 November, 2011, 12:00am
UPDATED : Friday, 11 November, 2011, 12:00am
 

The head of the International Monetary Fund (IMF) said after talks with senior Chinese leaders yesterday that Beijing is ready to let the yuan rise.

'My understanding is that authorities are prepared to let the appreciation continue in the months and years to come,' Christine Lagarde told reporters yesterday after meeting People's Bank of China governor Zhou Xiaochuan and Vice-Premier Wang Qishan .

'Certainly from our perspective, with the goal of stability and the solid, balanced and sustainable growth that we pursue, clearly that's welcomed and encouraged,' she said.

The Group of 20 nations last week welcomed 'China's determination' to increase foreign exchange flexibility in line with market fundamentals.

Lagarde said yesterday it was too early to include the yuan in the fund's Special Drawing Rights unit, an interest-bearing international reserve asset that includes the euro, British pound, Japanese yen and US dollar.

'I don't think the time has yet to come,' she said, adding, 'but there is a clear understanding that it will come in due course and that it will be a factor of the internationalisation of the currency.'

Lagarde was wrapping up a two-day visit to Beijing that had been held against the deepening debt debacle in Europe, which has sought Chinese assistance to tackle the crisis.

Lagarde also met Premier Wen Jiabao and Vice-President Xi Jinping during her visit. In his meeting with Lagarde, Wen said China would focus on maintaining a stable and rapid economic growth, and support measures taken by the IMF, European Union and European Central Bank to handle the crisis.

Wen said China would support the reform of the IMF, and facilitate the co-ordination of macroeconomic policies among different countries. Xi told Lagarde that countries should co-operate to face the difficulties, and to stop the crisis from spreading.

Lagarde refused to give details about talks with China on strengthening contributions to the IMF, saying only that the institution would welcome its members to increase bilateral lending or contributions.

Meanwhile, a senior White House official said US President Barack Obama would talk to President Hu Jintao this weekend about China's currency reform and global economic issues, including the European debt crisis, at the Asia-Pacific Economic Co-operation summit in Honolulu, Hawaii.

'On the Europe issue, there were a lot of questions when we were up here as if the Chinese were going to ride into Cannes and buy up the European debt,' US Deputy National Security Adviser Ben Rhodes said.

'What we've seen is that it was vastly overstated in terms of the role that China was going to play, per se, in that issue, that frankly it's a European solution that we're still trying to support.'

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