HONG KONG (Reuters) - Japan supports sending a “collective message” to China at a G7 meeting next month to allow more flexibility in the yuan, a government official said on Wednesday.
China has come under heavy pressure from the Group of Seven leading industrialized nations to revalue its currency, which some economists say is kept artificially low, giving it a unfair export advantage and hindering more balanced economic growth.
The remarks by Rintaro Tamaki, Japan’s vice minister of finance for international affairs, echoed concerns expressed by a senior Canadian official on Monday who said he would like to see the yuan move more freely.
The official said he expected finance ministers to discuss foreign exchange rates at the meeting but added they will not issue a communique. Canada is hosting the Feb 5-6 talks.
“It’s a collective message to China,” Tamaki said on the sidelines of the Asian Financial Forum in Hong Kong when asked about the response to China over the yuan.
Tamaki’s remarks had little impact on financial markets but offered additional evidence that Japan stands with other G7 members to press China on the issue, one trader in Tokyo said.
China has continually shrugged off pressure from its major trading partners to let the yuan appreciate, repeating its line that stability was in everybody’s best interests.
Reform of China’s exchange rate policy will be gradual, as exports will likely to take a long time to return to pre-crisis levels, the country’s commerce minister said on Tuesday.
The disagreement has highlighted the failure of big countries to resolve currency tensions which were thrown into focus by the global economic crisis, despite calls at a summit meeting last September for those issues to be tackled.
However, moves by China’s central bank this month to tighten liquidity and cool rapid economic growth have stoked expectations that Beijing may allow the yuan to appreciate before too long.
Tamaki also said that increased regulation of banks in Japan was a concern, but that regulators had not worked out what the impact on the industry would be.
Reporting by Joseph Chaney; Editing by Jacqueline Wong & Kim Coghill
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