China's policies under fire

DAVOS (Switzerland) - POLITICAL leaders, central bankers and financiers at the World Economic Forum have attacked China's monetary and trade policy and questioned its ability to tackle an overheating economy.

Top Chinese officials face an increasingly difficult task insisting that Beijing is acting in the interest of the world economy by keeping its yuan currency weak against the dollar and maintaining a huge trade surplus - US$196.1 billion (S$275.8 billion) in 2009.

Even in a keynote speech on the first day of the Davos forum on Wednesday, French President Nicolas Sarkozy made a veiled attack against China, saying festering trade imbalances were harming economic recovery.

'Currency is central to these imbalances,' he said. 'Exchange rate instability and the under-valuation of certain currencies militate against fair trade and honest competition,' he stressed.

'Persistent external imbalances' was also raised by Mr Ibrahim Dabdoub, who heads Kuwait's central bank. 'Somehow we have to tackle this part of the imbalances. We have to tackle the imbalances between China and the US, and the Gulf oil exporters and the US,' he said.

Billionaire financier George Soros added to the calls from Europe and North America for China to allow its currency to appreciate. 'The case for revaluing the renminbi is getting stronger and stronger,' he said, insisting that a stronger yuan would be 'good for China and the rest of the world'. -- AFP