G20 to debate China's yuan policy: Canada

China's controversial currency policy will be discussed at an upcoming G20 summit, a Canadian official said, despite an earlier warning by Beijing not to bring up the yuan issue.

Canada will host the leaders' meeting of the Group of 20 key economies in Toronto on June 26 and 27.

The yuan, which the United States and several other countries wants revalued, is to be discussed during talks on how member countries can contribute to the global economic turnaround.

"A key message [at the summit] will be that across the G20, all countries have things they need to do to support strong, sustained and balanced growth," a senior official told a briefing on Friday. "One of the things that I expect will be discussed is the contribution a more flexible China exchange rate will make to that," the official said.

Earlier, Chinese Vice-Foreign Minister Cui Tiankai said value of the yuan currency was not up for debate at the summit and again rejected outside interference in Beijing's foreign exchange policies. "The [yuan] is China's currency," he said. "This is not an issue the international community should discuss."

International pressure is mounting on China to revalue the yuan, which Washington says is being kept weak deliberately by Beijing to give exporters an unfair trade advantage that is leading to job losses in the US.

Sander Levin, the powerful chairman of a US congressional committee overseeing taxes and trade, said last week the G20 summit was "an important juncture for China to change its inflexible currency practices".

However, Zhang Tao, a top official at the People's Bank of China, said the yuan was never on the agenda of previous G20 summits, and reiterated that Beijing would adjust its currency policies at its own pace.

Zhang and Cui were speaking at a briefing on President Hu Jintao's participation in the summit.

Beijing maintains that letting its currency strengthen will not solve the problem of US job losses and has consistently rejected pressure on the issue. (AFP)

China to promote currency reform

China's central bank yesterday said it would further promote reform of its exchange rate mechanism, but maintained there was no basis for "large swings" in the currency. The statement was released amid growing pressure on Beijing to strengthen its currency and comes ahead of the G20 meeting in Toronto next week, where the controversial exchange rate policy is expected to be on the agenda.

"China's central bank has decided to further promote the reform in the RMB (yuan) exchange rate mechanism, and strengthen the flexibility of the RMB exchange rate," the bank said on its website. However, the central bank said there were no grounds for large movements or change in the exchange rate and reiterated that it will continue to manage the floating exchange rate "within the band already announced".

Export-driven China has effectively pegged the yuan to around 6.8 to the dollar since July 2008 to support manufacturers battered by the financial crisis and preserve jobs in a sector that employs tens of millions of people.

The currency has been allowed to move within a 0.5 per cent range on either side of the peg. Given the gradual recovery in the global economy and stability in China, it was "desirable to proceed with reform of RMB exchange rate regime and increase its flexibility," the bank said.

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