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Paulson demands greater currency flexibility from China

Tuesday, November 28th 2006 - 20:00 UTC
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United States Treasury Secretary Henry Paulson said Tuesday in London that “the need for greater currency flexibility” is a short term issue facing US-China relations.

Speaking to businessmen at the United Kingdom's Conference of British Industry annual conference, Paulson said he will be traveling to Beijing to take part in a Strategic Economic Dialogue with China in a fortnight.

Paulson admitted US's economic relations with China have suffered from "a fair amount of tension" and urged Beijing to let its currency float freely.

"There is a widespread belief in the US that the benefits of trade between the two countries are not being shared fairly and evenly", he emphasized, "more exchange rate flexibility is needed".

Paulson said the dialogue between the two countries needed to take "a longer term approach to China's ability to move ahead quickly with reforms, such as pursuing the rule of law, opening up their markets even further".

The currency issue, where the Yuan is widely viewed to be undervalued against the dollar and other major currencies, is a short term concern, Paulson added.

Earlier in the day Paulson said a strong dollar favored the United States in spite of the fact the greenback was loosing ground against most European and Asian currencies.

"A strong dollar is clearly in the interest of our nation and I feel very well with the current strength of the US economy", added Paulson.

"We have a healthy economy in successful transition from a growth rate at the beginning of the year which was not sustainable, to one which is sustainable".

Categories: Mercosur.

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