by http://online.wsj.com/article/SB124404959427381867.html
a.. ASIA NEWS
b.. JUNE 4, 2009
Malaysia, China Consider Ending Trade in Dollars
By SHAI OSTER
BEIJING -- Malaysia's prime minister said China and his country are
considering conducting their trade in Chinese yuan and Malaysian ringgit,
joining a growing number of nations thinking of phasing out the dollar.
"We can consider whether we can use local currencies to facilitate trade
financing between our two countries," Malaysian Prime Minister Najib Abdul
Razak told reporters at a briefing Wednesday after meeting with China's
premier, Wen Jiabao.
"What worries us is that the [U.S.] deficit is being financed by printing
more money," Mr. Najib said. "That is what is happening. The Treasury in the
United States is printing more notes."
China has been promoting the idea of replacing the dollar as the global
currency, suggesting that a basket of currencies less linked to the fate of
one economy would make more sense. It also has been talking about using the
yuan for trade settlements, starting gradually in the region and then
expanding farther abroad.
On Monday, U.S. Treasury Secretary Timothy Geithner urged China to move
toward a more-flexible exchange rate for the yuan. A stronger yuan would
increase China's domestic buying power and reduce the country's dependence
on exports.
Chinese trading partner Brazil also is looking at reducing its exposure to
the dollar by conducting its trade with China in yuan.
Despite countries' growing interest in adopting the yuan -- fostered by
China's growing economic clout and worries about the U.S. government's
deficit spending -- many experts agree it would take a long time to
liberalize China's currency enough to be used as a global benchmark. Right
now it is difficult to buy and sell yuan outside China.
Malaysia's Mr. Najib, speaking on the second day of a four-day visit to
Beijing timed to coincide with the 35th anniversary of diplomatic ties
established by his father, said the two countries signed a series of
framework agreements meant to facilitate trade and investment.
Mr. Najib, who is also finance minister, has been struggling to revive
Malaysia's export-dependent economy. In April, he unveiled measures to
liberalize the country's finance sector, allowing greater foreign investment
and rolling back some of the decades-old preferential policies granted to
the country's majority Muslim Malay population, which helped them compete
with the ethnic Chinese.
Last week, the government sharply revised down Malaysia's annual
gross-domestic-product forecast to a contraction of between 4% and 5%.
Analysts now predict the nation's fiscal deficit could rise to 8% of GDP,
the highest level in a decade.
But Mr. Najib ruled out more stimulus spending. "We've introduced one of the
biggest in the world -- as a percentage of GDP it's 9%. But there's a limit
to which we can introduce fiscal stimulus," he said.