PARIS, Oct 14 (Reuters) - China will not commit to a quick liberalisation of its yuan currency to help rebalance global growth, at a meeting of G20 financial leaders, but will offer to use expansionary fiscal policy to fuel domestic demand, a G20 official said on Friday.
Finance ministers and central bankers from the world’s 20 biggest developing and developed economies (G20) meet in Paris on Friday and Saturday to discuss, among other things, ways to rebalance growth between the world’s economic powers.
China’s control over the exchange rate of its currency is seen by many G20 countries as one of the key reasons for global trade and savings imbalances.
The United States and Europe have long called for Beijing to free the yuan, which China says it would do, but only over the medium term, without giving any dates.
The European Union wanted China to agree to a road map of making the yuan fully convertible in a bid to elicit some commitment to dates, but the efforts failed.
“No, they were pretty firm on that — there will be no progress,” one G20 official said of talks with China.
“They say their contribution to global growth in the short-term will be to ensure that growth in China does not slow down, even if they face the risk of inflation, through expansionary fiscal policy,” the official said.
“They always say that over the medium term they will make their currency fully convertible and free the exchange rate, but there will not be anything now,” the official said.
Another G20 source said after preparatory talks late on Thursday that China would commit in Paris to boost its consumption through a five-year plan, via households and companies as well as infrastructure.
China and the United States sparred this week over a U.S. Senate bill to press Beijing to raise the yuan’s value.
China’s trade surplus narrowed for a second straight month in September, to $14.5 billion, with both imports and exports lower than expected, reflecting global economic weakness and domestic demand cooling.
Meanwhile, data released in Washington gave new ammunition to U.S. lawmakers pressing for legislation to crack down on Chinese currency practices that they blame for millions of lost American jobs.
The U.S. Commerce Department said the U.S. trade deficit with China rose to a record $29.0 billion in August as imports grew 6.4 percent to $37.4 billion. The trade gap with China totaled $189.3 billion through the first eight months of the year, on pace to surpass last year’s record of $273 billion.