Bonds News

UPDATE 1-China lashes Fed easing as risk to global recovery

(Adds comments by officials)

SEOUL, Nov 11 (Reuters) - China said on Thursday that the U.S. Federal Reserve’s move to ease monetary policy risked undermining the global economic recovery, adding that Washington “should not force others to take medicine for its own disease”.

A senior Chinese central bank official told reporters at the G20 summit in Seoul that the Fed’s move had caused “strong concern” around the globe, and major reserve countries ought to factor in the global impact of their policies. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

(For full G20 coverage, click on [nN09105095]) ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

Zhang Tao, director of the international department of People’s Bank of China, also warned that disorderly capital inflows resulting from the Fed’s action could hurt emerging markets.

“For emerging countries, capital inflows may lead to significant increase in asset prices and foreign exchange reserves, and many ocuntries are concerned about that,” he said.

“Doubtlessly, disordered international capital inflows will make emerging countries very vunerable. As emerging countries are important for the global economic recovery, that will greatly increase the downward risks in the world economy.”

Referring to an idea floated by Washington for numerical targets to be set for trade imbalances among G20 countries, a Chinese Foreign Ministry also told reporters that it was “not realistic” to have a current account target that fits all.

A Foreign Ministry spokesman added that Chinese President Hu Jinatao, discussing Washington’s wish to see a sharp revaluation of the yuan, had told U.S. President Barack Obama earlier that reform of the currency would have to be gradual. (Reporting by Zhou Xin; Writing by John Chalmers)