International pressure for China to increase the value of its currency could spell trouble for Barbados, which does a fair amount of trading with the Asian country.
Ambassador to Beijing, Sir Lloyd Erskine Sandiford, admitted that trade with China was virtually one way.
“We import a lot of Chinese products and it is far from what we sell to China. If the yuan increases in value it means we would have to pay more for the goods we import.
“That is unless China is willing to absorb the cost but that would be against the WTO [World Trade Organisation] rules,” Sir Lloyd told the Nation recently at his Beijing office.
The United States has been pressuring China to appreciate its currency, which trades at US$1to 6.5 yuan. The issue came up at a recent G20 meeting of leading economies and United States Treasury Secretary Timothy Geithner wrote members suggesting limiting surpluses and deficits to a percentage of output.
But Japan, Germany and Russia were opposed to what one delegate called “planned economy” thinking, which is believed to be directed at China. Economic experts reasoned that getting Beijing to tackle its large trade surplus would be an indirect way of forcing the yuan to rise in value.
“If the yuan goes up, every step taken will not be enough. The Chinese are saying when the United States currency went up there wasn’t talk about the position of other countries . . . but now it is the Chinese they are hostile and want the Chinese to adjust their currency.
“I believe they will adjust if it in the interest of the country . . . Every country must do what is in the best interest of their country,” said Sandiford.
