Speaking at the Asia Pacific Economic Coooperation (Apec) summit, US President Barack Obama said that China has not done enough to allow its currency to appreciate in value.
He went on to say that China needed to conduct itself by the same rules as other countries, as China’s currency policy is “distorting” global trade.
The value of the yuan has recently become a point of contention between the United States and China, as the US feels China’s export-led economy has been unfairly benefitting from a purposefully devalued currency.
In his speech, Obama reported that most economists are in consensus that the Chinese currency, the yuan, is undervalued some 20 to 25 percent.
The unfair trade advantage becomes apparent after this figure, as US goods become much more expensive in China, while Chinese goods become much cheaper to import into the US.
While the US President said that there has been a “slight improvement” over the last year, he claimed that the efforts were not enough.
Obama also called on Asia Pacific countries to open their markets more to foreign competition, which the region has notoriously been reluctant to do in the past. He said that US economic stake in the Asia Pacific region was “absolutely critical” to America’s prosperity, and would promote growth in the face of the eurozone crisis and economy-staggering natural disasters such as Japan’s earthquake.
Trans Pacific Partnership
At the two-day Apec talks in Hawaii, Obama was able to gain support for a free trade agreement that the United States plans to lead, called the Trans Pacific Partnership (TPP).
Canada and Mexico also announced that they would join the talks to remove trade barriers and promote free trade throughout the Pacific.
Canadian Prime Minister Stephen Harper said that the partnership involves criteria that Canada “can easily meet,” which makes the country interested in moving forward with the trade talks.
The world’s third largest economy, Japan, has also agreed to participate in the Trans Pacific Partnership talks, lending great legitimacy to the pact. Before the Apec summit in Honolulu, the TPP included only smaller economies, such as Singapore and New Zealand.
Most notably, China has not announced any intent to participate in the Asia Pacific free trade agreement.