WASHINGTON (AFP) - A change in currency policy will not by itself resolve the big trade imbalance between the United States and China, with further economic reforms needed, Federal Reserve chairman Ben Bernanke said yesterday.
Bernanke, appearing before Congress for a second day for the central bank's semiannual economic report, said China's currency peg is only part of the problem that has led to a massive US trade deficit with Beijing.
"The currency, while an important issue, is probably in itself not going to solve the trade imbalance problem," he told the Senate Banking Committee in response to a question.
"There are fundamental saving investment imbalances, both in the United States and abroad, which need to be changed in order to make real progress on the trade balance."
Bernanke highlighted "the importance of structural changes in (China's) economy such as increased safety net and improved financial systems that would increase the share of their output going to consumers and be consumed at home."
"And the combination of currency appreciation and this other set of measures is really what's needed to begin to move in the right direction," he said.