(www.telegraph.co.uk, April 16, 2007)China made an official pledge to loosen further the peg on its currency as the world's biggest economies promised to redress the policies that have generated worrying global imbalances.

  
Rodigo De Rato [right] with Paul Wolfowitz at the IMF/World Bank meeting
The written commitment yesterday from the economic powerhouse was one of the centrepieces of the final day of the International Monetary Fund's spring meeting.

The summit - the final one to be chaired by Gordon Brown - ended with a plea to politicians to seal the Doha round of world trade talks this summer and with the IMF promising further reforms to its structure..

Mr Brown and the IMF's managing director, Rodrigo de Rato, said the commitment from China was one of the first signs that the fund's new role was proving a success.

Whereas the fund previously concentrated on diagnosing economic problems in individual countries, it had to have a major overhaul last year after it became clear that massive current account deficits had developed in various nations despite its best efforts. It pledged instead to look at the relationship between nations.

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At the Washington meeting, it presented the results of the first year-long inquiry into global economic imbalances. Europe and Japan reasserted their ambitions to improve flagging productivity and growth levels while the US pledged to address its trade deficit and Saudi Arabia promised more investment in its oil sector.

But while China promised to let the renminbi float more freely, some said this was of little consequence without a detailed timetable. Although China allowed the currency to float within a narrow band in 2005, it has come under repeated fire - particularly from the US - for its policy of pegging the renminbi to the dollar. Senators have threatened trade sanctions, saying the policy boosts Chinese exports and threatens US jobs.

The meetings were overshadowed by controversy surrounding Paul Wolfowitz, the World Bank president, whose position is under question following revelations that he arranged pay rises for his romantic partner.

Source:telegraph.co.uk