China’s government is planning to have “frank discussions” with US authorities on the US Federal Reserve’s decision 4 November on a second round of quantitative easing. “For the U.S. to undertake a second round of quantitative easing at this time we feel is not recognizing the responsibility it should take as a reserve currency issuer, and not taking into account the effect of this excessive liquidity on emerging market economies,” said China’s Vice Minister of Finance, Zhu Guangyao, at a briefing in Beijing.
Both governments are trying to tone down their differences ahead of the G20 summit in Seoul 11 and 12 November.
The US central bank intends to buy up to $600 billion worth of US Treasuries in order to breathe life into a moribund US economy. The Chinese government is the world’s largest foreign holder of US Treasuries, and is afraid that the US action will lead to a debasing of the US currency.
Links to other sites: ABC News, Xinhua, Wall Street Journal
The QE2, one of Britain’s finest cruise ships, but now being retired at age 40, ran aground near Southampton, sailing in on the ship’s final run. BBC
