By Zhou Xin and Koh Gui Qing
February 11, 2011 3:52 PM EST
The United States has incited Brazil and India to criticise China's currency policy, but Beijing need not worry too much because it can defuse the tension through talks, a series of Chinese government advisers told Reuters.
Independent analysts warned, however, that a belief that Brazil and India are doing Washington's bidding and are not truly aggrieved could make Beijing complacent and undermine fledgling ties between the emerging powers.
Increasingly widespread calls for a stronger yuan are awkward for China, which is accustomed to facing U.S. pressure over its tightly controlled exchange rate but has long tried to cast itself as the natural ally of other developing nations.
Brazil and India are unlikely to be any more successful than the United States in persuading Beijing to permit faster appreciation, researchers in Chinese government think tanks said.
"They must realise that the root of problem is not China but the United States," said Chen Fengying, director of the World Economy Institute at the Institute of Contemporary International Relations in Beijing.
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"Yes, we know India's inflation is high and Brazil is raising interest rates, but how can China's currency policy solve your problems?"
Critics accuse Beijing of giving its exporters an unfair advantage by keeping the yuan low, but the Chinese advisers said that an ultra-loose U.S. monetary policy debasing the dollar was to be blamed for rising currencies in developing nations.
CRUMBLING BRICS
The "BRIC" grouping of fast-growing emerging markets -- Brazil, Russia, India and China -- would provide Beijing with an avenue for making its case, the advisers told Reuters.
"Complaints from other BRIC countries add to the pressure over the yuan as they are key trading partners and China has to take them seriously," said Song Hong, a senior researcher in the Institute of World Economics and Politics of the Chinese Academy of Social Sciences.
"However, China is unlikely to change its ways because of the additional pressure. When the United States pressed China, China explained itself to Washington, and China can do the same with the BRIC countries," he said.
The BRICs, a term coined by Goldman Sachs in 2001 to describe the growing influence of large emerging economies, have been at the forefront in pushing for more clout in international forums for developing nations.
Despite a shared interest in increasing their stature, the foursome have struggled with gaping differences over climate and trade issues and have yet to come up with clear proposals to advance a common agenda.
The divisions have sharpened recently.
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