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Hu Jintao criticises US monetary policy

Alex Spillius

Published 17/01/2011 | 11:37

Presidetn Hu Jintao of China has issued thinly veiled criticism of US monetary policy on the eve of a state visit to the United States.

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Former president George W Bush reserved state visits for leaders of democracies, but Mr Obama will welcome Hu at the White House with the full pomp of a 21-gun salute and a black-tie dinner after Oval Office talks on Wednesday, in a sign of China's growing clout.

And in a rare interchange with Western media, Mr Hu responded to written questions from two American newspapers, taking a tough line on currency, the most contentious economic issue affecting relations between the two global powers.

He implicitly criticised the US Federal Reserve Bank's recent decision to pump $600bn into the US economy, a move attacked by some as coming at the expense of other countries' exports.

"The monetary policy of the United States has a major impact on global liquidity and capital flows and therefore, the liquidity of the US dollar should be kept at a reasonable and stable level," he said.

While dubbing the international currency system a "product of the past", he suggested the dollar would nevertheless remain the reserve currency of choice for some time as it would be "a fairly long process" before China's currency, the yuan, would become a player.

President Barack Obama is likely to pressure Hu on the yuan's value. Critics say Beijing intentionally undervalues its currency to boost exports and many in the US business community are angry at what they see as the adverse effect on American growth and jobs.

Three Democratic senators have scheduled an announcement on Monday of new legislation "to vigorously address currency misalignments that unfairly and negatively impact US trade".

Mr Hu, who is expected to step down as president and general secretary of China's Communist Party in 2012, arrives on Tuesday night in Washington for what will be his first and last state visit to these shores.

Heading off any criticism over his country's human rights record, which has resurfaced recently with the treatment of Lu Xiaobo, the dissident and Nobel Peace prize winner, he said: "There is no denying that there are some differences and sensitive issues between us. We both stand to gain from a sound China-US relationship, and lose from confrontation," he said. But he added the two countries should "respect each other's choice of development path".

In a wide-ranging and unusually frank speech last week, US Secretary of State Hillary Clinton urged China to free dissidents and improve treatment of minorities, pledging not to shy away from disagreements during the visit.

Telegraph.co.uk

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