China’s leader says “US dollar reserve currency product of past”

From the BBC website. On the eve of US and Chinese talks in Washington Chinese President Hu Jintao reiterated criticism of a decision by the US Federal Reserve to inject $600bn into the economy, which some argue will weaken the dollar at the expense of other countries’ exports.

“The monetary policy of the United States has a major impact on global liquidity and capital flows and therefore, the liquidity of the US dollar should be kept at a reasonable and stable level,” President Hu said. Meanwhile, he disagreed with suggestions that letting the yuan appreciate in value would help China to combat inflation.

He said inflation, which reached 5.1% in November – its highest level in 28 months – was “on the whole moderate and controllable”.

“We have the confidence, conditions and ability to stabilise the overall price level,” he said.

Beijing has previously come under pressure over its currency from the US, which has accused China of manipulating the yuan to help boost Chinese exports. It will be interesting to see what progress will be made in the talks.

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