US President Barack Obama on Friday said that there seems to be a positive signal from China with regard to the flexibility of its currency Yuan, but it is too early to say whether the appreciation that will track the market is sufficient to allow for the rebalancing.
"The initial signs were positive, but it's too early to tell whether the appreciation that will track the market is sufficient to allow for the rebalancing that we think is appropriate," Obama told reporters at a joint news conference with the visiting Russian President.
Over the weekend, China had announced that it will make its currency more flexible, but did not give any further detail.
"I will say that we did not expect a complete 20 per cent appreciation overnight, for example, simply because that would be extremely disruptive to world currency markets and to the Chinese economy.
Ultimately, not surprisingly, China's got to make these decisions based on its sovereignty and its economic platform," Obama said.
But we have said consistently that we believe that the RMB is undervalued, that that provides China with an unfair trade advantage, and that we expect change, he said.
The fact that they have said they are beginning that process is positive, and so we will continue to monitor and verify how rapidly these changes are taking place, he added. The President said the US will be able to track a trajectory.
"And if that trajectory indicates that, over the course of the year, the RMB is appreciated a certain amount, that it is more in line with economic fundamentals, then hopefully not only will that be good for the US economy, that will also be good for the Chinese economy and the world economy," he said.
Just to widen out the challenges that the world economy faces, we said in Pittsburgh in the G-20 that it was important for us to rebalance, he said.
In part because the US economy for a long period of time was the engine of world economic growth, we were sucking in imports from all across the world financed by huge amounts of consumer debt, Obama said.
"Because of the financial crisis, but also because that debt was fundamentally unsustainable, the United States is not going to be able to serve in that same capacity to that same extent. We are obviously still a huge part of the world economy. We are still going to be open. We are still going to be importing, as well as exporting," the US President said.
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