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China Stresses Global Economic Stability as It Heads to G20, APEC Summits


The Chinese government is emphasizing the themes of global economic stability and unity as President Hu Jintao prepares to go to the back-to-back G20 and Asia Pacific Economic Cooperation summit meetings. Beijing also is hitting back at calls to re-value its currency, by criticizing recent U.S. moves that could weaken the dollar.

China's Assistant Foreign Minister Liu Zhenmin says his country is ready to work with the rest of the international community to coordinate policies aimed at hastening the world economic recovery.

During the two coming international meetings, says Liu, leaders will discuss the world economic situation, reforming international financial institutions, trade and financial regulation. He calls the Group of 20, which meets first, a "premier forum" for global economic governance.

Currency is one issue that is expected to be high on the agenda.

The United States and other countries for years have called on China to allow the value of its currency, the yuan, to rise. Critics accuse China of maintaining an unfair trade advantage by keeping the yuan's exchange rate artificially low.

China rejects charges that it manipulates the yuan and says reform of its exchange rate regime is continuing at its own pace. Beijing also has struck out at the U.S. Federal Reserve's decision last week to put more money into the financial system.

Vice Finance Minister Zhu Guangyao said recently that Chinese officials will have a frank exchange of views with U.S. officials over the Federal Reserve's quantitative easing policy.

Zhu says as a main reserve currency issuing country, the United States has a responsibility to help stabilize global financial markets. He says the latest Fed move could cause excessive amounts of capital to flow to emerging markets, which he said could shock their financial stability.

China and other countries are worried that the Fed's move will substantially weaken the dollar's value.

Zhu Feng - who is not related - is a professor at Peking University's Center for International and Strategic Studies. He says there is another reason the Chinese government is worried about the dollar's drop in value.

Zhu says the main reason is because a substantial U.S. devaluation could hurt the value of U.S. assets that China owns.

China is the top foreign holder of U.S. debt, with more than $860 billion in Treasury bonds.

The two-day G20 summit starts in Seoul on Thursday. It brings together leaders of the eight leading industrialized nations, plus major emerging market and smaller industrialized countries, which together represent more than 85 percent of the global economy.

The G20 will be followed Saturday and Sunday by the annual summit meeting of the Asia Pacific Economic Cooperation forum, in Yokohama, Japan. APEC is a non-binding forum to promote regional trade and investment for countries on both sides of the Pacific Ocean.

Despite heated words over currency, Professor Zhu says he thinks the most important issue will be whether the countries can strengthen economic coordination, following the financial crisis.

Zhu says he thinks G20 success will be whether the countries can reach what he calls a "good consensus" on strengthening macroeconomic collaboration.

China has been one of the world's economic bright spots since the global financial crisis that began in 2008. While major developed economies still struggle to recover, China has been registering strong growth and has overtaken Japan as the second largest economy - right behind the United States.

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