LONDON, Feb 4 (AFP) - China gave no firm hint Friday it was ready to bow to US and European pressure to ease its exchange rate policy as Group of Seven finance officials prepared for a two-day meeting where currency volatility, economic growth and poverty were also on the agenda.
Finance ministers and central bankers from Britain, Canada, France, Germany, Italy, Japan and the United States were to come together here at a working dinner before launching into substantive talks on Saturday.
Although not a member of the G7, China has been invited to the gathering informally for the second time, with Chinese Finance Minister Jin Renqing and central bank head Zhou Xiaochuan expected to join their G7 counterparts at lunch on Saturday.
US Treasury Undersecretary for International Affairs John Taylor said here Friday that Washington wanted to see China "move as quickly as possible towards a flexible exchange rate."
Taylor, who is replacing US Treasury Secretary John Snow, absent with a chest cold, added: "Our discussions with the Chinese have been good and candid."
US and European officals maintain that China's dollar-pegged currency is undervalued, giving the Chinese an unfair advantage over exports from their key trading partners.
China has so far resisted calls to allow the yuan to float according to a timetable set by the West and analysts say that stance is unlikely to change here.
Addressing a seminar in London Friday, Zhou pointedly made no mention of exchange rate policy.
China has repeatedly pledged to ease its dollar peg but has not said when, maintaining only that any eventual loosening would be gradual.
Despite its refusal to budge on the currency question, China's profile on the global economic scene is clearly rising.
Bank of England governor Mervyn King said Friday that the G7 should in fact include both China and India in their formal currency discussions.
King identified three main blocs in the current international monetary system -- namely the dollar, the euro, and an Asian bloc of currencies that are to varying degrees pegged against the dollar.
"The current global imbalances are the natural result of policy decisions by all three blocs," King said.
"It is therefore meaningless to try to identify the culprit, and blame any one bloc's woes on another."
Europe and the United States nonetheless have clear ideas of what the other needs to do eliminate imbalances and pockets of sluggishness in the world economy.
European Central Bank President Jean-Claude Trichet, speaking at a seminar here, appealed to the United States to promote savings as a means of reducing its gaping current account deficit.
"Clearly what we have ... is that there is a level of lack of savings which has to be corrected, certainly in the United States and we all agree on that," Trichet said.
Eurozone officials fear that the weakening dollar, reflecting investor concern about the persistent current account and budget deficits in the United States, will harm European growth prospects by making eurozone exports more expensive and thus less competitive.
The current account is a broad measure reflecting trade in goods and services as well as certain financial transactions.
Appearing at the same seminar Friday US Federal Reserve Chairman Alan Greenspan said the US current account deficit may be about to shrink in the face of market forces and renewed emphasis on budget restraint.
He told the gathering that market pressures "appear poised to stabilize and over the longer run possibly to decrease the US current account deficit and its attendant financing requirements."
He said he did not see a crisis resulting from the imbalance, arguing that the world's largest economy was flexible enough to adapt to the changing circumstances.
US officials for their part insist that Europe must take concrete steps toward more business-friendly, less rigid economic management that -- they maintain -- will pull the eurozone out of the doldrums and enable it to contribute to global demand.
The United States posted growth last year of 4.4 percent compared to an estimate by the European Union's executive commission of just 2.0 percent in the eurozone.
Armed with such statistics, Taylor is expected once again to prod Europe to implement far-reaching structural reforms aimed at galvanizing momentum.

02/04/2005 17:20 GMT - AFP