Former Federal Reserve Chairman Paul Volcker, who is also chairman of President Barack Obama’s Economic Recovery Advisory Board, said he continues to be concerned by global economic imbalances.
Developing economies such as China still have a “heavy dependence” on the U.S. as a market for their exports and the U.S. still has an “inability to produce savings,” Volcker said at a financial forum in Beijing today.
“The imbalances remain and those imbalances are particularly categorized with the relationship between the U.S. and China, the two leading countries in the world now,” Volcker said. “Concerns about adjustments that I had five years ago remain.”
Volcker’s comments come as Obama, Chinese President Hu Jintao and other world leaders are to gather this week for the Group of 20 Nation’s meetings in Seoul. South Korean President Lee Myung Bak said Nov. 3 that he expected G-20 leaders to agree on “guidelines” for current-account positions to ease global trade imbalances.
Chinese Vice Premier Wang Qishan met Volcker in Beijing yesterday, the official Xinhua News Agency reported. Wang and Volcker discussed economic relations between China and the U.S., Xinhua said.
The Federal Reserve’s plan to buy $600 billion of Treasuries to pump money into the world’s biggest economy has been criticized by Chinese officials including Vice Foreign Minister Cui Tiankai, who said yesterday that so-called quantitative easing may undermine the global economic recovery.
Dai Xianglong, chairman of China’s national pension fund and a former governor of the nation’s central bank, said today at the Beijing forum where Volcker spoke that the world needs a stable dollar. Dai proposed setting a trading range for the dollar.