Beijing to cut current a/c surplus to 4 pc

NEW YORK: China plans to cut its current account surplus and proceed with foreign-exchange reform to help rebalance the global economy, central bank deputy governor Yi Gang said.

China aims to reduce the surplus below 4% of its gross domestic product in the next 3-5 years, from 11% in 2007 and 5.8% in 2009, Yi said at a panel during an International Monetary Fund meeting in Washington.

That would be the smallest surplus in its current account, the broadest measure of trade in goods and services, since 2004. China is under pressure from the Western nations to allow the yuan to rise at a faster pace to help reduce its trade surplus with the U.S. to Europe.

“The adjustment is necessary,” Yi said on Sunday. “We are committed to do our share of adjustment. We are committed to a more flexible exchange regime. But the approach is probably a gradual one.” Yi said China has received undeserved criticism for its currency policy, saying Beijing has allowed the yuan to appreciate more than 20% in the past five years.

Global finance chiefs at the IMF meeting this week warned a race to weaker exchange rates in countries from China to Brazil and Japan risks hurting the world economy. Yi said it was the monetary policies from major developed world that helped fuel the global tension.

on currencies. Record- low borrowing costs in the US, Europe and Japan are prompting investors to pile into emerging market assets and create appreciation pressure for those currencies, Yi added. “We have to look at the problem globally and where is the origin of the problem,” Yi said.