China should appreciate its currency to help address global imbalances, the head of the IMF said Monday. Dominique Strauss-Khan, the fund’s managing director, said that the countries at the heart of the imbalances should do more to ease them – and in China’s case this means placing more emphasis on domestic demand, Reuters reported. “A stronger currency is part of the package of necessary reforms,” he said. “Allowing the renminbi and other Asian countries to rise would help increase the purchasing power of households, raise the labor share of income, and provide the right incentives to reorient investment.” Strauss-Khan acknowledged that Beijing is already taking steps to boost household consumption, but he believes more can be done. At the Asia Pacific Economic Cooperation summit, finance ministers called for greater exchange rate flexibility – what is widely seen as code for renminbi appreciation – but China said its policy remained unchanged.
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