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China urges the US to act on dollar slide

China turned the tables on the United States, urging Washington to take"necessary actions" to stop the slide of the dollar and restore equilibrium to global currency markets, a senior Chinese official said.

"As a major country having ownership to the most important currency in the global economy, I think the United States has the responsibility, as much responsibility as do the others, to act, to take the necessary actions to restore equilibrium in the currency market," Wang Xiaolong, a senior foreign ministry official in charge of economic affairs said.


"It is only wise, given the weight of the US economy in the world markets, it is only wise that they would take into account the concerns of others, as well as the world economy as a whole."

Wang was speaking ahead of a China-US summit Saturday on the sidelines of the Asia-Pacific Economic Cooperation forum between Presidents George W. Bush and Hu Jintao, where Bush was widely expected to urge China to loosen the 10-year old peg of the Chinese yuan to the US dollar.

Critics, especially the United States, maintain the yuan is undervalued and gives China an unfair trade advantage, while China has indicated that it is willing to gradually loosen the peg in the short term, but not totally abandon it.

Wang refused to specify when and if China would take measures to loosen the peg, but strongly indicated that Beijing would closely watch the slide of the dollar before making any moves.

"We will wait and see because... first we haven't seen the reaction of some of the other players and secondly we will have to see what the impact of the recent fall of the dollar will be on the world economy," he said.

The dollar tumbled to the lowest level against the yen for over four years on Friday as markets bet against central bank intervention to arrest the American currency's decline.

The dollar fell to as low as 102.92 yen in late European trading, the lowest level since April 2000.

Meanwhile the euro scaled a peak of 1.3067 dollars, flirting with a record high 1.3074 dollars seen on Thursday.