Canada agrees to put China forex item on G7 agenda

Wed Jan 20, 2010 12:16pm EST
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By David Bailey

WINDSOR, Ontario (Reuters) - Canada has agreed to Japan's request to discuss the need for a stronger Chinese yuan at a February 5-6 meeting of G7 finance ministers and central bankers, Finance Minister Jim Flaherty said on Wednesday.

Flaherty told reporters that Japan's finance minister had asked for the item to be on the agenda and that, as host nation, Canada would oblige.

The G7 has long urged China to allow more flexibility in its exchange rate, which critics say is kept artificially low, giving it an unfair export advantage and contributing to imbalances in the global economy.

"The new Japanese finance minister has been clear in his wish that ... we have this item on the agenda. So we will have it on the agenda, and we will discuss it together," Flaherty said.

"It is a concern when people ask about the weakness in the American dollar, one has to look at the fact that some of the Asian currencies, including the Chinese currency, are artificially constrained," he said.

Japan supports sending a "collective message" to China at the meeting, even though no final communique will be issued unlike past G7 meetings.

Flaherty did not clarify if such a message would be delivered at the end of the meeting via a joint finance ministers' press conference.

With the G20 -- which includes emerging heavyweights China, India and Brazil -- now taking over as the prime forum for global economic policy making, the smaller G7 group of rich nations will become less formal, and next month's meeting will be more "in the nature of a fireside chat," Flaherty said.   Continued...