IMF Chief Says Stronger Chinese Yuan Needed

JOE McDONALD

BEIJING (AP) — The chief of the International Monetary Fund added to pressure on Beijing to let its currency rise, saying Monday that a stronger yuan and more Chinese consumer spending are needed to help ease global economic imbalances and assure healthy growth.

The comments by IMF Managing Director Dominique Strauss-Kahn came as President Barack Obama began a visit to China amid strains over trade and currency. U.S. manufacturers complain that Beijing gives its exporters an unfair price advantage by keeping the yuan undervalued, but Obama is expected to go easy on the issue.

"A stronger currency is part of the package of necessary reforms," Strauss-Kahn said in a speech at a finance conference in Beijing.

Strauss-Kahn said China has started to make important reforms needed to raise domestic demand, such as increase spending on health care and pensions to free families to spend more on consumer goods.

"Allowing the renminbi (Chinese yuan) and other Asian currencies to rise would help increase the purchasing power of households, raise the labor share of income and provide the right incentives to reorient investment," Strauss-Kahn said, according to a text of his speech. "Higher Chinese domestic demand, along with higher U.S. saving, will help rebalance world demand and assure a healthier global economy for us all."