Financial leaders from Asia's biggest economies voiced concern yesterday about global trade imbalances, but China said it could not move too fast on the yuan and that developed nations must do more to fix the problem.
Top policymakers gathered for the annual meeting of the Asian Development Bank in Hyderabad, southern India, where Chinese Vice Finance Minister Li Yong (
"I believe we should share the responsibility. We are all on the same boat and no one can escape if this boat sinks," he said.
"Major developed countries should take more responsibility. We need consultations rather than trade protectionism, and we should not politicize trade imbalances," he said.
But Li said more investment in pension and other social security programs will spur consumption and "gradually" eliminate imbalances in China's international balance of payment.
China has been accused by US lawmakers and Treasury Secretary John Snow of keeping the yuan artificially weak, contributing to a US$201.6 billion trade deficit with the Asian nation last year.
China's trade surplus widened to US$11.2 billion in March, its second-highest monthly surplus on record, a government report showed on April 11.
Moving too fast to increase the value of the yuan would "have implications for our exports, imports, agriculture, industry and everything," Li said.
China, under pressure from the US, last July loosened its currency's decade-old peg to the US dollar and revalued it by 2.1 percent.
Since then, the yuan has appreciated 1.23 percent against the US dollar.
The US dollar has declined since the Group of Seven on April 21 called on emerging Asian countries, particularly China, to allow their currencies to rise.
The US currency has fallen 2.2 percent versus the Japanese yen since then, 0.9 percent against the South Korean won and 0.07 percent against the yuan.
Japan added that focusing too much on currencies as a means of addressing trade imbalances would risk fueling market speculation, which ultimately could damage the world economy.
Many economists say that the US simply consumes too much and that its growing current account and fiscal deficits are unsustainable.
The US said it was on a path to cut its budget deficit as a percentage of GDP.
"We have said it frequently, and I say this again today, it is too large and we need to bring it down," said Timothy Adams, the US Treasury undersecretary for international affairs.
"But we need to put it in perspective. Last year, it was 2.6 percent of GDP, we are still on a trajectory to bring it down to 1.5 percent of GDP by 2009," Adams said.
The rising sense of alarm over trade imbalances -- which has helped push the US dollar down this year -- comes amid signs that the IMF is set to take on a role in monitoring exchange rates.
At a Group of Seven meeting of rich nations last month, top financial officials gave their support for adapting the IMF's remit to include "multilateral surveillance."
China, Japan and South Korea, in a joint statement yesterday, called for more voting rights and representation at the IMF to reflect their economic power.