China shows concern over US new monetary policy

China said Monday that it was concerned with and has questions about the US new monetary policy, and will discuss it with the US at the upcoming G20 summit in Seoul.

Vice Minister of Finance Zhu Guangyao made the remarks at a press briefing on President Hu Jintao’s attendance to the meeting, responding questions concerning the US Federal Reserve’s (Fed) second round of quantitative easing, QE2.

The Fed plans to purchase $600 billion worth of government bonds in a bid to revive the sluggish US economy.

“We will have candid discussions with the US side. We hope its macroeconomic policy can be conducive to the development of the world economy, not the contrary,” Zhu said.

This is the second round of such stimulus measures, after the US Federal Reserve (Fed) purchased $1.7 trillion worth of mortgage-backed securities and treasury notes between December 2008 and March 2010 in a bid to keep the economy from plunging into another Great Depression.

“The current situation is totally different from the time of the first round. There’s no shortage of funds in the financial market,” Zhu said.

He urged the United States to “realize its responsibility and obligation as a major currency issuing country, and take responsible macroeconomic policies.” The communique of the meetings of G20 finance ministers and central bank governors has stressed that countries with systemic influence should pay attention to the “spillover effect” of their macroeconomic policy.

As the recovery of world economy is still unstable, a responsible macroeconomic policy will not only be good for the United States, but also the world as a whole, the vice finance minister said.

He added that China will hold candid discussions with the US side on the issue, as part of the dialogue on the macroeconomic policies.

The G20 summit will be held from Nov 11 to 12 in Seoul of the Republic of Korea (ROK).