China may face pressure from nations including the U.S., India and Brazil to allow a stronger yuan during today’s Group of 20 seminar, former U.S. Trade Representative Susan Schwab said.
“My guess is that the conversations will take place, but they will take place quietly,” Schwab, a strategic adviser at law firm Mayer Brown LLP, told Bloomberg Television. “Most of the G-20” has concerns about the yuan’s value, she said.
G-20 finance chiefs are meeting in Nanjing, China, for a seminar initiated by French President Nicolas Sarkozy on reshaping the global monetary system. Ahead of the meeting, Xu Hongcai, a Chinese state economist, revived developing nations’ complaints that U.S. monetary policy and the dollar’s dominance have fueled inflation and volatility in exchange rates and capital flows.
Nobel Prize-winning economist Robert Mundell, who’s attending the seminar, told Bloomberg Television today that the yuan will “eventually” become a reserve currency.
U.S. Treasury Secretary Timothy F. Geithner, Chinese Vice Premier Wang Qishan and European Central Bank President Jean- Claude Trichet are among those due to take part in the one-day seminar.
Sarkozy told Chinese President Hu Jintao that he wants to avoid a confrontation on the issue of the yuan’s value, a French official said after the two leaders met in Beijing. The U.S. regards the currency as “substantially undervalued.”
Capital Flows
Sarkozy and Hu also discussed including the yuan in the International Monetary Fund’s basket of special drawing rights, the official said.
Officials including French Finance Minister Christine Lagarde will discuss topics including “shortcomings in the international monetary system” and dealing with volatile capital flows, according to the schedule for the conference.
German Deputy Finance Minister Joerg Asmussen said this week that the event isn’t intended to deliver short-term fixes and is part of preparing for a G-20 meeting in Cannes in November that should yield more substantive results.
