German Finance Minister Peer Steinbrueck said on Tuesday he had urged China to take more responsibility to help resolve global economic imbalances, including by playing a larger role in international financial institutions. In an interview with Reuters, Steinbrueck said Chinese officials were also concerned about the impact on China's economy from the weak US dollar and US economy.
Imbalances have been highlighted by China's ballooning trade surplus with the United States and Europe, as well as its huge foreign exchange reserves, which at over $1.8 trillion are the biggest in the world. Steinbrueck, on a four-day visit to China, met on Monday with his Chinese counterpart Xie Xuren, central bank governor Zhou Xiaochuan and Vice Premier Li Keqiang.
"I tried to convince them that they have to take a higher degree of responsibility, and I tried to invite them to cooperate in all the international community's organisations," Steinbrueck said, citing examples such as the International Monetary Fund and the Financial Stability Forum.
"It is a necessity to invite China to take over more responsibility, because most of these world-wide problems, we can't solve them without inviting China." Steinbrueck did not comment directly on the yuan or the position Chinese officials had taken on foreign exchange policy.
However, he said earlier that the issue had figured in his talks with Chinese officials, and he urged Beijing to let its currency appreciate more quickly against the euro to better reflect economic fundamentals. US and European officials have repeatedly pressed Beijing to loosen its reins on the yuan, saying it is undervalued and gives China an unfair trade advantage.
Although the yuan has appreciated by nearly 18.5 percent against the dollar since the July 2005 revaluation, it has depreciated slightly against the euro over that period in the face of overall euro strength. Chinese officials had raised their own concerns about the impact of high commodity and energy prices, Steinbrueck said, underlining the common ground that exists on such issues.
"They are very much interested in stabilising the financial markets as well as to contribute to decreasing the global imbalances," he said. Steinbrueck said he had gotten the impression in his discussions that Beijing was interested in diversifying its foreign exchange reserves but that the dollar and the US economy remained the main focus.
"I think they are interested to diversify a little bit their activity, so the euro, it is a very hard currency for them, and it is a success story," he said. "So it might happen that they diversify their strategy or their activities a little bit, but nevertheless the dollar and the investment in the United States is still the main focus of the activities of China."
Asked whether Chinese officials had shown concern about the recent weakness in the dollar, Steinbrueck said: "It does affect them. So they have some concerns regarding the American economy, the financial turmoil, and how much does this affect their real economy and their financial interests. So I think they are concerned, as we are."