UPDATE 2-G20 calls subdued so far for stronger China yuan

* Japan finmin says G7 did not talk about yuan

* BOJ head Shirakawa: forex not tool to fix trade disputes

* Seoul wants to mediate between China and trade partners

(Adds comments on G7 meeting)

By Leika Kihara

WASHINGTON, April 22 (BestGrowthStock) – Calls for a stronger
Chinese currency have been muted among finance leaders
gathering for talks among the Group of 20 rich and developing
nations.

Japan said Group of Seven talks on Thursday evening did not
address the Chinese yuan, suggesting the United States had not
pressed its case among other rich nations for a freeing up of
the currency in response to growing domestic political
pressure.

The broader G20 forum has gone softly in past meetings on
pressuring China for swift action on the yuan, which some
economists say is 40 percent undervalued, with governments
judging it more productive to prod Beijing privately.

There was no sign of a radical change of path from the
group’s members as they gathered in Washington on Thursday.

Japan played down the topic and warned against pushing
Beijing on currency flexibility, even as International Monetary
Fund chief Dominique Strauss-Kahn pointed to a stronger yuan as
one of several measures to help fix global trade imbalances.

“This issue is a big problem for the United States and
China, but I think that the G20 countries will refrain from
openly discussing this topic,” Japanese Finance Minister Naoto
Kantold reporters on Thursday.

After a working dinner of G7 finance ministers and central
bankers, Kan said there was no discussion of the Chinese yuan
or financial regulation at the G7 meeting because most of the
time was spent discussing Greece’s debt troubles.

Shocked by the financial crisis, global leaders have set
out to address the imbalances in the world economy, which most
economists say largely come down to enormous trade surpluses
run by some countries, the most visible being China.

South Korea, host of this year’s G20 summit in November,
said it can mediate between China and its trade partners,
including the United States.

“Conditions in China are such that, even in China’s own
interest, there are voices within China urging an appreciation
of the renminbi,” Shin Hyun Song, a senior economic adviser to
President Lee Myung-bak told Reuters.

NO CHANGE

Japan and South Korea have been among the very few G20
countries to speak up on the yuan so far.

Brazil’s central bank governor said earlier this week it
was “critical” that China’s currency should appreciate for the
good of the global economy. And his Indian counterpart was
quoted as saying the yuan should strengthen.

Bank of Japan Governor Masaaki Shirakawa said exchange
rates should not be used as a tool to fix trade imbalances,
while Kan warned that openly pressuring China on currency
flexibility would not work.

“It is inappropriate to use forex rates as a tool to solve
trade disputes,” Shirakawa told reporters upon arriving in
Washington on Thursday.

“Each country should also guide policy with the aim of
achieving economic stability. This goes for currency rate
policy, too,” he said.

Criticism of China’s yuan policy has been strongest in the
United States and markets are watching closely a debate over
whether to label a currency manipulator — potentially
triggering a rise in trade tariffs on Chinese goods.

Japan has tried to persuade Beijing that a stronger yuan
will help curb inflation and benefit China’s economy (Read more about the fastest growing economy.), and signs
of movement from officials have led markets to price in a small
gain in the yuan’s value over the next year. (CNY1YNDFOR=: )
(Editing by Padraic Cassidy and Patrick Graham)

UPDATE 2-G20 calls subdued so far for stronger China yuan