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Last Updated: Friday, 8 September 2006, 09:16 GMT 10:16 UK
China rejects currency criticism
Chinese banknotes
The US is leading the call for the yuan to be more flexible
China has rejected the notion that its currency is responsible for global trade imbalances, saying globalisation is a more significant factor.

"China only occupies 5% of global GDP... by no means can China's exchange rate affect the global imbalance," said Chinese finance minister Jin Renqing.

Some of China's trading partners, notably the US, have accused it of keeping its currency artificially low.

The comments followed a two-day meeting of Apec ministers in Vietnam.

The 21-member Asia Pacific Economic Cooperation (Apec) group, which includes Russia and the US, accounts for almost half of global trade.

Currency controversy

Critics argue that by keeping the yuan low, Chinese exports have an unfair competitive advantage.

Of China's trade surplus, about a quarter is accounted for by trade with the US. In 2005, the US's trade deficit expanded to hit a record $202bn (107bn).

Many in the US say that if the value of the yuan were raised, its trade deficit would be reduced.

"Reform is beneficial to the economic stability in China and also to this region and the world" said Chinese finance minister Jin Renqing.

But he added that macroeconomic policies of individual nations were a more important factor than China's exchange rates.

US Treasury Secretary Hank Paulson said currency flexibility was "very important" but added that countries first need "a strong financial system which is open to competition."

Trade talks

Other issues Apec members addressed included how to get global trade talks back on track.

In a statement issued on Friday, the group said it remained "firmly committed" to restarting trade talks.

The comments came after the Doha round of trade talks collapsed in July after the EU, US and developing nations failed to reach agreement on agricultural subsidies.

"I can't think of anything... that can have a more positive impact on the global economy than trade liberalisation," Mr Paulson said at the start of the Apec meeting.


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