Calls for revaluation intensify

Pressure remains on China to revalue the yuan after President Hu Jintao failed to commit to a time or a process of moving toward a more flexible currency during his meetings in Washington last week. Finance ministers from the G7 countries agreed that redressing the imbalances in global trade involved a degree of "shared responsibility" but still singled out China as a danger to world growth. They pointed to the role currency flexibility can play in strengthening domestic demand, moving away from export-led growth and creating more robust financial sectors. However, a proposal for IMF surveillance of exchange rate policies was rejected by People's Bank of China governor Zhou Xiaochuan who said "drastic unilateral movements" would not help the global economy. He called on the IMF to respect member nations' independence over exchange rates but did go on to say that, given the reforms made, the yuan could probably move a little bit faster. The ballooning US trade deficit has prompted warnings from the IMF, which fears the continued rise in the deficit could see foreign investors abandon the US economy, possibly triggering a global economic crash.