Currency system is ‘product of past’ – Hu Jintao

Chinese President Hu Jintao has said the international currency system dominated by the US dollar is a “product of the past”.

Mr Hu also said China was taking steps to replace it with the yuan, its own currency, but acknowledged that would be a “fairly long process”.

The remarks to two US newspapers come ahead of a state visit by the Chinese leader to Washington this week.

They reflect continuing tensions over currency issues between the two powers.

In a rare interview published in the Washington Post and Wall Street Journal, Mr Hu also reiterated criticism of a decision by the US Federal Reserve to inject $600bn into the economy, which some argue will weaken the dollar 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,” President Hu said.

‘Important contribution’

He meanwhile disagreed with suggestions that letting the yuan appreciate in value would help China to combat inflation.

Beijing has previously come under pressure over its currency from the US, which has accused China of allegedly manipulating the yuan to help boost Chinese exports.

Despite criticism of the current system, Mr Hu said he believed it would be a long time before the yuan – or renminbi (RMB) – was accepted as a global currency.

“China has made important contribution to the world economy in terms of total economic output and trade, and the RMB has played a role in the world economic development,” he said.

“But making the RMB an international currency will be a fairly long process.”

Source: BBC