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China SDR lobbying unveiled by Wikileaks

Tuesday 30 November 2010 - by Will Henley


US diplomatic cables leaked on Tuesday by the Wikileaks website reveal Chinese lobbying efforts to ensure the renminbi is included as one element in a new "alternative reserve currency".

According to a note marked "secret" from the American Embassy in Beijing, a senior unnamed Chinese official has discussed "reforming the international monetary system, vis-a-vis the dollar and an alternative reserve currency such as Special Drawing Rights."

The cable, a summary report of a meeting held in April 2009 ahead of the G20 summit in Pittsburgh, indicates that Chinese officials are set on a major reform of the monetary system even if only for "symbolic" reasons.

A reserve asset created by the International Monetary Fund more than 40 years ago, Special Drawing Rights are designed as a supplement to governments' official reserves. The SDR is freely exchangeable and its basket of currencies currently comprises the euro, Japanese yen, UK pound and US dollar.

Suggesting that the Chinese government is determined that the renminbi be included in the SDR, the cable reads: "[The official] said China had a huge stake in how the United States managed the dollar. Further, XXXXXXXXXXXX suggested that the RMB could become a component of the SDR.


"Mentioning that the RMB could compose two percent of the SDR value, XXXXXXXXXXXX noted that this was more of a symbolic than practical change."

The senior Chinese official also insisted that its government had no intention of destabilising the dollar or the wider financial system.

"Expounding on this last topic, XXXXXXXXXXXX stated that a stable US dollar was good for China, and Beijing had no interest in 'destabilising the system'."

The IMF earlier this month said it would not include
the Chinese currency within the Special Drawing Right basket of currencies.



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READERS' COMMENTS
2010-11-30 15:28:20 | Anonymous
The whole of China is one giant big ENRON of dodgy accounting and hidden debt, huge property bubble, let's hear some more about that perhaps.