SYDNEY, Oct 12 – Australia will add to pressure on China to move towards a more flexible exchange rate, Treasurer Wayne Swan said Wednesday, adding that urgent action was also needed to avoid a second financial crisis.
Swan said he would use the G20 minister’s meeting in France at the weekend to again raise the issue of the tightly controlled Chinese yuan currency.
“Developing countries need to lift domestically generated growth and move to more flexible exchange rates,” he told parliament.
“I argued this case directly to Chinese leaders on my recent visit to Southern China, as well as at recent International Monetary Fund and G20 meetings in Washington, and I’ll continue to do so at this week’s G20 meetings in Paris.”
Swan’s comments came as the US Senate passed a bill to punish China for alleged currency manipulation, a move Beijing slammed as a “time-bomb” that could start a trade war between the world’s top two economies.
China has repeatedly condemned the bill, saying it breaches World Trade Organisation (WTO) rules.
Officials argue that the undervalued renminbi gives China an unfair trade advantage, making goods heading to China from other countries dearer while Chinese exports are cheaper to foreign buyers.
On the global outlook, the Treasurer said the challenges facing the world economy were the most severe since the financial crisis.
“Global markets have been rightly concerned about the lack of political will shown in the US and Europe to deal with this crisis,” he said, adding that there was a crisis of confidence in the capacity of political institutions to deliver the policy responses required.
“That’s why I will be making clear to my G20 colleagues that urgent action is needed if we are to avoid a return to the global economic dark age of 2008,” he said.
While Australia had escaped recession during the global financial crisis Swan warned more individual and collective action was needed to address financial market volatility and put the world recovery back on track.
“If the worst fears for Europe are realised this time, the impacts on our own economy could be just as severe as those in 2008,” he said.