UPDATE 2-China hits back at U.S. plans before G20 summit

* China: wrong to discuss current account targets at G20

* Beijing concerned about flood of money after U.S. easing

* China again restates commitment to yuan reform

(Adds more quotes, details)

By Simon Rabinovitch and Zhou Xin

BEIJING, Nov 5 (BestGrowthStock) – China on Friday pushed back
strongly against U.S. policies ahead of a G20 summit,
ridiculing Washington’s plan to set current account targets and
warning of risks in the Fed’s monetary easing.

The remarks by Cui Tiankai, a vice Chinese foreign
minister, were the first high-level expression of Beijing’s
stance on the issues.

“We believe a discussion about a current account target
misses the whole point. If you look at the global economy,
there are many issues that merit more attention — for example,
the question of quantitative easing,” he said.

The United States proposed at the G20 finance ministers’
meeting last month that countries should cap current account
surpluses or deficits at 4 percent of GDP as part of efforts to
rebalance the global economy.

The idea of numeric targeting met strong resistance from
Japan and Germany, though some Chinese advisers had said that
Beijing might be able to see eye-to-eye with Washington. Cui
put these suggestions to rest.

“Of course, we hope to see more balanced current accounts,”
Cui said. “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.”

In a briefing on China’s outlook for the G20 summit in
Seoul next week, Cui also rejected attempts by other countries
to set targets for yuan appreciation.

“That would indeed be asking us to manipulate the
renminbi’s exchange rate, and it is something that we will of
course not do,” he said. The yuan is also known as the
renminbi.

The United States and European countries, among others,
have accused China of keeping its currency artificially cheap
to give its exporters an unfair advantage. Beijing has
repeatedly stated a commitment to reform the yuan and insisted
that it alone will decide how to do so.

U.S. EASING

Cui said China would closely monitor the impact of the
Federal Reserve’s plan announced this week to buy $600 billion
of U.S. government bonds to stimulate the economy.

“They owe us some explanation,” he said. “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.”

Cui added that Beijing would appreciate the chance to have
a discussion with the United States about the global
consequences of its quantitative easing.

“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,” he said.

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

Emerging market economies said the Fed’s move made a
substantive deal on cutting global economic imbalances less
likely at the G20 summit next week. [ID:nTOE6A300V]

GOVERNANCE REFORM

Despite discord over the Fed’s policy and China’s slow pace
of currency reform, the Seoul meeting should at least mark a
breakthrough in one area of global monetary reform: the
recalibration of power at the International Monetary Fund.

The IMF’s board will meet on Friday to discuss a G20
proposal to transfer 6 percent of voting power to
under-represented emerging countries, such as China, India and
Brazil, from developed economies. [ID:nN02200429]

“This is not the end, not even the beginning of the end,
but the end of the beginning,” Cui said. “Many countries have
said that the quota system itself needs to be reformed, and the
IMF governance structure also needs to be reformed.”

The G20 was at a crucial juncture, evolving from an
emergency mechanism to deal with the financial crisis to one
that promotes global governance reform, Cui said.

With many uncertainties still facing the global economy, a
spirit of cooperation was essential, he said.

“China has a saying to describe selfishness, namely
‘destroy the bridge once the river has been crossed’. But the
problem is, we have not crossed the river yet, so if someone
wants to destroy the bridge, does he not see the risk of
falling into the water?”
(Editing by Ken Wills)

UPDATE 2-China hits back at U.S. plans before G20 summit