Flexible exchange rate sought

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LONDON -- Economic officials from the world's richest countries have resumed their pressure on China to adopt a more flexible exchange rate. They called yesterday for vigorous action against such threats to growth as high oil prices, protectionism and inflation.

Finance ministers and central bank governors from the Group of Seven nations, meeting for the final time this year, singled out China in their closing statement as they warned about excess volatility and disorderly movements in exchange rates.

"We expect that further flexible implementation of China's currency system would improve the functioning and stability of the global economy and the international monetary system," the G-7 said.

The statement was stronger than the group's communique after its September meeting, when the bankers welcomed China's decision in July to let its yuan currency trade more freely but they stopped short of pressing for further reforms.

European Central Bank President Jean-Claude Trichet, who met with fellow G-7 central bankers yesterday, said their latest comment was "in the continuity of the message that we have been giving." However, the communique still appeared to fall short of the wishes of some members of the G-7, which includes Britain, the United States, Japan, Italy, Germany, France and Canada.

China allowed the yuan, previously pegged tightly to the dollar, to rise in value by 2.1 percent in July and said it would let the currency fluctuate by as much as 0.3 percent daily. However, during the past four months, it has risen by only an additional 0.3 percent, prompting calls from some leaders for a further revaluation.

The new system "has operated with too much rigidity," said U.S. Treasury Secretary John W. Snow. "This rigidity constrains exchange rate flexibility in the region and thus poses risks to China's economy and the global economy."

Chinese Finance Minister Jin Renqing, who joined the talks at the invitation of Britain's Treasury chief, Gordon Brown, earlier said he had a "very good meeting" with the G-7 ministers but did not comment on the yuan.

Discussing the overall global economy, the G-7 leaders said growth remains solid, although it was slowed by high and volatile oil prices that have exacerbated other risks, including "rising protectionist sentiment, the possibility of increasing inflationary pressures and growing global imbalances."

The ministers also said the World Trade Organization must make significant progress toward a global trade treaty when it meets in Hong Kong later this month.

Mr. Snow said trade liberalization was essential to boost the world economy and alleviate poverty.

"We cannot allow it to fail," said Mr. Snow, who urged the European Union and Japan to make "significant moves forward" on agriculture.

Trade negotiators are trying to agree on a binding treaty lowering trade barriers across all sectors. Agriculture has proved a sticking point, and the trade round, launched in Doha, Qatar, in 2001, is already well behind an original December 2004 deadline.