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NEWS UPDATES Asean Affairs  6 November 2010

Asean concern over proposal

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Asian countries are to express concern at next week's G20 summit in South Korea about a US proposal for targets to rein in global trade imbalances, a plan China rejected on Friday.

Association of Southeast Asian Nations (Asean) members will discuss the issue at a meeting of finance officials of the Asia Pacific Economic Cooperation (APEC) forum in Kyoto this weekend, Thailand's finance minister said on Friday.

"We're concerned that it could encourage trade protectionism," Korn Chatikavanij said of the plan suggested by the United States last month that G20 members restrict current account surpluses or deficits to 4 percent of GDP. "We'd like a coordinated agreement," he added.

G20 leaders meet at a summit in South Korea next Thursday and Friday.

A member of one Asean delegation told Dow Jones Newswires that a group statement would also be discussed during a meeting with U.S. Treasury Secretary Timothy Geithner this weekend in Kyoto.

China on Friday rejected the US proposal, which would force China, among others, to rein in its massive trade surplus.

Targeting China's hefty current account surplus would be an indirect way for Washington to cajole Beijing into relaxing its grip on the yuan and allowing the currency to appreciate - a move demanded by key trading partners.

The president of the Asian Development Bank urged Beijing to make the yuan more flexible, saying it would be good for the Chinese economy.

Haruhiko Kuroda also lent his support to the US trade proposal but said it needed modifying.

"I think some kind of benchmark may be useful for reducing global imbalances in the medium term," Kuroda said.

Political tensions have been high as trading nations caught in the US-China crossfire look to protect their export-driven growth and jostle for a trade advantage.

Asian nations cite super-loose US monetary policy as a factor roiling currency markets, hammering the dollar and prompting a wave of speculative money to pour into Asia and drive up regional currencies.

Pressure on the greenback has increased after the US Federal Reserve this week announced further easing measures to pump money into the US economy.

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