China, France agree to discuss yuan flexibility

AP News
Posted: Aug 26, 2011 7:39 AM
China, France agree to discuss yuan flexibility

France and China have agreed to discuss how to work toward easing Beijing's controversial currency controls and making its yuan freely traded, the French finance minister said Friday.

The two governments agreed during a visit this week by President Nicolas Sarkozy to Beijing to work on the issue ahead of a Nov. 20 meeting in France of the Group of 20 major developed and emerging economies, Francois Baroin told reporters.

The United States, the European Union and other trading partners are pressing Beijing to ease controls on its yuan. They complain it is kept undervalued, giving China's exporters an unfair price advantage and swelling its trade surplus.

"We have discussed with our Chinese counterparts and friends the possibility of a path that could enable the yuan to become convertible, reflecting China's commercial and economic weight," Baroin said at a news conference.

Officials would work on "the best ways that will of course conform to the Chinese government's strategy and time line," he said.

Chinese officials say the yuan eventually will be allowed to trade freely and they are gradually expanding its use abroad, including for trade. But Beijing says it will decide the pace of any changes.

Baroin said the yuan might eventually be added to the four major currencies _ the dollar, the euro, Japanese yen and British pound _ used to determine the value of Special Drawing Rights, a type of money used by the International Monetary Fund.

That change would be largely symbolic but would reflect China's rapid economic rise to become the world's second-largest economy and Beijing's increased voice in managing global finances.