Prime Minister rules out differences between US-China over currency devaluation

ON BOARD AIR INDIA ONE - The Prime Minister, Dr Manmohan Singh, has ruled out any differences between China and the United States over the currency devaluation, saying the two nations have very intimate relations and the exchange rates controversy will affect them very substantially.

The Prime Minister, who returned to New Delhi after the G 20 Summit in South Korea late on Friday night told reporters on board Air India One: “I think US and China have very intimate economic relations. I don’t see, for example, the exchange rates controversy will affect very substantially, I do not think that their relationship will suffer.”

Giving his comments on the valuation of the Chinese currency, Dr Singh said Chinese have the surplus, which, no body can contradict.

“Well, Chinese have the surplus which is I think, no body can deny, but the relation between surplus countries and deficit countries is not a technical issue. If you go back to the Bretton Woods debate, there was at that very time, there was a Keynes plan, there was a White Plan, and Keynes was of the view that surplus countries have as much responsibility to take adjustment measures as the deficit countries,” said Dr Singh.

“But the international financial mechanism is essentially a power mechanism, and the way the international financial system functions, so far creditors countries have always been able to have their way,” he added.

Dr Singh further said the G20 now wants to have a more balanced system, where both surplus and deficit countries would have to take corrective action. (ANI)