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September 17, 2006 4:05 pm

G7 keeps pressure on Chinese

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Finance ministers and central bank governors of the group of seven leading economies maintained their pressure on China to revalue its currency on Saturday.

Repeating the G7's stronger language of April, the ministers repeated their view that exchange rates "should reflect economic fundamentals".

"Greater exchange rate flexibility is desirable in emerging economies with large current account surpluses, especially China, for the necessary adjustments to occur," the communique added.

Hank Paulson, the US Treasury secretary, said: "China needs to move more quickly".

The G7 has become more positive about the world's economy, noting strong and more balanced economic growth in Europe, Japan and Canada. The ministers saw little risk of a US recession led by a decline in house prices, noting only that G7 "performance remains strong amid moderating growth in the United States".

The finance ministers stressed the need to restart the Doha world trade talks and urged "all parties to show political will and flexibility". But no new concessions were brought to the table.

Regarding the reform of the International Monetary Fund, the G7 called for all countries to support the Fund's proposals to increase the voting power of China, South Korea, Mexico and Turkey immediately and to review a more fundamental change in voting power over the next two years. They also supported the Fund's ambitions to create a new rapid lending facility for well run countries.

On debt relief, the G7 urged international organisations to ensure that poor countries who had their debts cancelled last year "will not accumulate new debts beyond sustainable levels".

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