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REFILE-HIGHLIGHTS-China's stance on economic issues at the G20

Published 11/05/2010, 02:46 AM

(Refiles to fix typo in 16th paragraph)

BEIJING, Nov 5 (Reuters) - China on Friday gave a briefing ahead of the G20 summit in Seoul next week. Following are the comments of Vice Foreign Minister Cui Tiankai on a range of economic and financial issues.

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ON G20 AGENDA

"The G20 should revolve around common issues facing the global economy, rather than be narrowly focused on the technical issues of certain countries or certain areas, and still less the specific issues facing emerging market economies."

"If any issues about a specific country are to be discussed, they should discuss the issues of the main reserve currency-issuing country, because their policies have a big impact on the global economy."

"There are indeed many imbalances in the global economy, such as in north-south development, the development of the international financial system and representation in global financial decision making. All these are structural imbalances."

"So we believe a discussion on current account targets misses the whole point."

"If you look at the current global economy, there are many issues that merit more attention -- for example, the question of quantitative easing. In recent days, the issue has raised great concern among all economies in the world.

"In addition, some major economies have implemented an almost-zero interest rate policy for a long period, and the impact that this will have on other countries' economic stability is another issue of wide concern."

"These are the issues that have systemic and structural implications for the world economy, and they are worthy of our attention."

CURRENT ACCOUNT TARGETS

"As for current account targets, of course, we hope to seem more balanced current accounts. But we believe it would not be a good approach to single out this issue and focus all attention on it. The artificial setting of a numerical target cannot but remind us of the days of planned economies."

"China has carried out market-oriented reforms in its economic system over many years, but now there are some people in the world who want us to go back to the days of a planned economy. This really surprises us.

"In addition, for both the academic and business communities, such a target lacks a concrete basis in either theoretical or practical terms.

"Therefore, we believe that it is inappropriate to discuss such a topic at the G20. This would send the wrong message to the world that the G20 cares about unimportant issues. That will do no good for the world economic recovery.

YUAN REFORM

"As for China's exchange rate, we have steadily moved ahead with reform."

"But if anyone or any country gives China a specific target, requiring the yuan to appreciate to a designated level during a given period, that would indeed be asking us to manipulate the renminbi's exchange rate, and it is something that we will of course not do."

THE FED'S QUANTITATIVE EASING

"They owe us some explanation.

"I've seen much concern about the impact of this policy on financial stability in other countries. As the main issuer of a reserve currency, we would hope that it (the United States) adopts a responsible position.

"It is fair to say that all emerging economies and developing countries, including China, are influenced by macro-economic policies from the major reserve currency-issuing country, and we certainly will keep a close eye on how these policies impact us.

"In economic terms, such policies will have a spillover effect. But I am afraid, if such policies continues, the spillover may turn into a flood. So I think the international community has reason to be concerned.

"The Federal Reserve has the right to make its own decisions, and it need not consult with any other country beforehand. And there is no one to impose a specific target on it.

"But we hope they can consider the impacts on other countries in the world when they make decisions, not just their own economy.

"We are willing to have a discussion with the United States about the impact of such a policy on the Chinese economy and the world economy."

IMF REFORM

"We note that the recent G20 finance ministers' and central bank governors' meeting set targets for reform. That represented progress.

"The essence of IMF quota reform is to reflect more accurately the current reality in the global economy. The distribution of quota shares in the IMF has long lagged behind global economic realities. This situation should be addressed as soon as possible.

"It is most reasonable and sensible to increase China's quota share in the IMF, but on this issue China does not seek to maximise its own self-interest. Rather, we hope to see a win-win situation for all emerging market economies and other members of the IMF.

"The completion of quota reform does not signify the end of IMF reform. Many countries have said that the quota system itself needs to be reformed, and the IMF governance structure also needs to be reformed. These are tasks for further IMF reform going forward."

"This is not the end, not even the beginning of the end, but the end of the beginning." (Reporting by Zhou Xin and Simon Rabinovitch; Editing by Ken Wills)

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