China will be under pressure to unhitch its currency from the ailing U.S. dollar when finance officials from the world’s seven richest countries meet this weekend, though the Asia nation is unlikely to offer any promises.
China, expected to be the focus of much of the talks, is a guest at the summit of finance officials from the United States, Britain, Canada, France, Germany, Italy and Japan.
China’s pegging of the yuan to the U.S. currency has supercharged its exports as the dollar has declined — dealing a double blow to Japanese and European companies already facing competition in international markets from now-cheaper U.S. products. Critics contend the yuan is undervalued by as much as 40 percent.
Even U.S. manufacturers, whose overseas sales have risen as the dollar weakened, are complaining that China’s dollar peg policy has contributed to the loss of factory jobs and the record trade deficits.
John Taylor, the U.S. Treasury Department’s undersecretary for international affairs, expressed optimism this week that the United States is making progress in its campaign to get Beijing to stop linking the yuan to the dollar.
“We’ve seen steps that are being taken, which are consistent with a move toward a flexible exchange rate,” said Taylor, who will attend in place of Treasury Secretary John Snow, who has a cold.
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