UPDATE 1-China's Zhou urges patience in correcting imbalances

Mon Oct 11, 2010 4:16pm EDT

(Adds quotes from discussions)

WASHINGTON Oct 11 (Reuters) - China central bank Governor Zhou Xiaochuan called on Monday for patience in correcting global imbalances, saying a quick move could create more problems.

"People may not have that kind of patience, so they would like to see a quick changes in the balance, but it may cause a kind of overshooting," Zhou said during a discussion with other central bank governors at the National Press Club.

The comment comes as the United States and other countries are pushing China to allow its yuan currency to rise more rapidly in value as part of a package of actions to make its economy less dependent on exports for growth.

Currency prices changes can trigger "a very quick immediate response" from some businesses and consumers. But they also work over a longer term to influence the allocation of resources within an economy, he said.

In the last 20 years, a large amount of money in China was invested into manufacturing and associated sectors such as infrastructure, education and supply chains.

"Now I think the price signals and the other structural changes already guide the new investment very much away from manufacturing sectors" and toward other sectors such as services," Zhou said.

China supports the Group of 20 goals of "strong, sustained balanced growth," he said.

"But to me," he added, "I think there are two parts of adjustment," one through the currency price and the other through structural adjustments, which necessarily take longer." (Reporting by Mark Felsenthal and Doug Palmer; Editing by Leslie Adler)

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