G7 MEETING China needs a currency 'befitting a major economic leader - Paulson

China needs a currency "befitting a major economic leader", US Treasury Secretary Henry Paulson said, urging Beijing to move more quickly toward greater exchange rate flexibility.
He said at a press conference following the G7 meeting that all his G7 colleagues agreed on the need for greater Chinese currency flexibility.
Paulson, who will visit China next week after participating in the opening sessions of the annual meetings of the International Monetary Fund and World Bank, said "the biggest message" he will take with him to Beijing is to "continue moving and more quickly" toward currency flexibility.
But he said he does "not have a specific target" for the yuan's value, saying "that would be very presumptuous of me. China is a sovereign nation."
On Japan, Paulson said the country deserves "a great deal of credit for moving forward on a number of economic reforms" and getting out of its "economic malaise." But he said Japan "needs to continue with its reforms."
He had no comment on the Japanese yen.
Asked about the US economic slowdown, Paulson emphasized the growth "engine" role the US has played and continues to play.
Paulson said the US housing sector has slowed from "an unsustainable rate," but said that growth in other sectors is offsetting the housing drag, including commercial real estate, business investment and exports.
He also pointed to the reduction of the federal budget deficit due to unexpectedly high revenues. He said the longer term challenge is to deal with unfunded entitlements.
Paulson devoted much of his remarks to the need to pursue trade liberalization. He said G-7 officials were in agreement that protectionist pressures are "one of the major risks we're going to be dealing with for some time."
Paulson said he will tell WTO's Pascal Lamy, who he will be meeting soon, that the US "is willing to make concessions" on farm trade issues to get the Doha Round rejuvenated.
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G7 MEETING - More rapid yuan rise in China's interests - Bank of Canada's Dodge

A more rapid appreciation of the yuan will be beneficial to China, Bank of Canada governor David Dodge said.
"A more rapid yuan appreciation" will be in China's interests as it will "enable them to deal with demand pressures resurfacing again," Dodge said at a press briefing after the G7 meeting here.
He said the wording of the G-7 communique "were carefully chosen."
Today's G7 statement did not contain any change from the group's forex language at its meeting in April this year, merely reiterating that "greater exchange rate flexibility is desirable in emerging economies with large current account surpluses, especially China, for necessary adjustments to occur."
When asked whether that meant little had changed since April as far as China's foreign exchange rate actions were concerned, Canadian Finance Minister James Flaherty said he was of the view that, "The Chinese have made every effort to be forthcoming in what they do and in their view that their participation is part of what is needed but is not the whole story, certainly."
"The discussion remains alive and well," Flaherty said, "But I think, quite frankly, that there's an effort to be fairly clear in the concerns in the fairly open discussions."
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G7 MEETING - US urges action to choke off alleged Iran financing to extremists

US Treasury Secretary Henry Paulson urged G7 partners to join efforts to choke off "illicit finance" to extremists by nations such as Iran.
Speaking after the G7 meeting here today, Paulson said it is crucial to protect "the safety, soundness and security of the international financial system" from extremists.
"We discussed the need to take action to disrupt terrorist and illicit finance related to specific threats from North Korea and Iran," Paulson said after the G7 talks.
He said that Iran had used more than 35 front companies to channel funds to extremist groups, identified by US officials as including the Lebanese Shiite militia Hezbollah and the Palestinian groups Hamas and Islamic Jihad.
Some "blue-chip" banks had become inadvertently implicated in financing terrorism, he said, and so US authorities have launched an "educational" campaign so that banks can be "vigilant and identify risks".
The G7's official statement did not identify any one country, but said all members "agreed to intensify our efforts to combat money laundering, proliferation networks as well as terrorist and illicit financing".
Japanese Finance Minister Sadakazu Tanigaki said the statement did not necessarily target Iran, in which several G7 participants such as Japan, France and Germany have major commercial interests.
"We are talking about these matters in general," he told reporters.
Paulson denied that any G7 country was "resistant" to the idea of educating banks about the risks of doing business with dodgy companies from Iran or anywhere else.
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