Geither, Japan's FinMin Weigh In on RMB Decision

♠ Posted by Emmanuel in , at 4/03/2010 02:37:00 PM
Perhaps Chinese monetary authorities are like children: the more you tell them to do something, they do the opposite. But, don't tell US Treasury Secretary Tim Geithner that since he's still agitating for a move in light of the upcoming April 15 decision on whether to label China as a currency transgressor:
Treasury Secretary Timothy Geithner said on Friday he wanted to maximize the odds that China would lift the value of its yuan currency quickly and said he believed that they would do so. "It's very important that China move," Geithner told Bloomberg Television. "I'm quite confident that they will decide it's in their interest to move. We're going to try to make sure we're going to maximize the chance that they move quickly."

He did not directly answer a question on whether the Treasury would delay a much-anticipated currency report in which it could decide to label Beijing as manipulating the value of the yuan.
It's interesting that that the Japanese Finance Minister Naoto Kan isn't saying the same thing quite so explicitly. Taking the more diplomatic route, he notes that Japan won't really be as interested in the outcome. Nevertheless, Kan hints that China might face an asset bubble of its own alike that which helped sink Japan's fortunes in the not-so-distant past. Call it an implicit warning that points in the direction desired by US and EU bigwigs:
Japan's Finance Minister said on Saturday he told Chinese Premier Wen Jiabao he expects China to make a wise decision on the issue of its yuan currency amid international pressure for China to let its currency strengthen. "The issue of the yuan, currencies and excess liquidity are related to each other. I told him that," Naoto Kan, who is also deputy prime minister, told reporters after meeting Wen in Beijing on Saturday. "But I did not tell him what to do." Kan also said he warned Wen about possible impacts an asset bubble could have on an economy as Japan is still suffering the consequences of the burst of its property bubble in the 1990s.

China has come under pressure from some Group of Seven rich nations to revalue its currency, which some economists say it keeps artificially low, giving it an unfair export advantage and hindering more balanced economic growth.

But Wen said arguments on the issue should not be made in a one-sided manner, Kan told reporters. "He told me that there are various relations with regard to trade, such as Japan-China, U.S.-China and EU-China, so things should not be said unilaterally," he added. "Generally speaking I think that's right. With regard to Japan-China trade, Japan has no major problems... but relations vary with other countries, so I told him that I expect China to make a wise decision as it has done so [before]."

Tokyo believes that a more flexible yuan is desirable for world economy and China, which has taken over the United States as Japan's No.1 export destination. But it has been more reserved than some of its G7 peers in its criticism of China's currency system on the view that pressuring Beijing could backfire.