China's commerce minister says dollar printing is 'out of control'

Section:

By Simon Rabinovitch
Reuters
Tuesday, October 26, 2010

http://uk.reuters.com/article/idUKTRE69P3S020101026

BEIJING -- Dollar issuance by the United States is "out of control," leading to an inflation assault on China, the Chinese commerce minister said in comments reported on Tuesday.

Chen Deming, speaking at a trade fair in southern China, said that exporters had done a good job of preparing themselves for exchange rate changes as well as rising labour costs but were suddenly confronted with new challenges.

"Because the United States' issuance of dollars is out of control and international commodity prices are continuing to rise, China is being attacked by imported inflation. The uncertainties of this are causing firms big problems," Chen was quoted as saying by the official Xinhua news agency.

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Chinese officials have criticised U.S. monetary policy as being too loose before but rarely in such explicit language.

At the G20 meeting in South Korea which ended on Saturday, Chinese Finance Minister Xie Xuren said that issuers of major reserve currencies -- code for the United States -- must follow responsible economic policies.

Along with posing an inflationary risk, a weak dollar also places appreciation pressure on China's yuan since its value is so closely tied to the U.S. currency.

China's consumer price inflation rose to 3.6 percent in the year to September, a 23-month high. It has been led mainly by food costs and many economists expect it to crest before the end of the year.

Despite his concern about the impact of U.S. monetary policy, Chen gave a positive outlook for Chinese trade next year. He said export growth would be stable, while imports would increase strongly.

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