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Chinese President Hu Jintao said countries with currencies that are held as reserves by other nations must consider the implications of their monetary policies for the rest of the world.

“Major reserve-currency issuing countries should take into account and balance the implications of their monetary policies for both their own economies and the world economy with a view to upholding stability of international financial markets,” Hu told the Group of 20 leaders in Pittsburgh, according to an English translation of his prepared remarks.

Chinese officials this year have called for an alternative to the dollar as a global reserve currency. China’s central bank deputy governor, Hu Xiaolian, has argued that the dollar’s global role allowed the U.S. to borrow cheaply abroad, fueling the credit boom that led to the financial crisis.

U.S. Treasury Secretary Timothy Geithner yesterday reiterated the U.S. commitment to a “strong dollar” policy. The U.S. has a “special responsibility” to make sure the dollar can continue its role as a global reserve currency.

China will pay close attention to how the U.S. proceeds, He Yafei, China’s vice foreign minister, told reporters at a briefing in Pittsburgh. He noted that the G-20 is weighing a “peer review” process in which members assess the policies of other nations.

“China has a huge foreign-currency reserve dominated by the U.S. and other major reserve currencies, so it is natural that China pays close attention to fluctuations in these currencies and it will have a direct impact on China’s assets,” He said faxless cash advance.

Overtakes Germany

China has overtaken Germany to become the world’s third- largest economy with gross domestic product of about $3.9 trillion, according to data compiled by Bloomberg. Its currency reserves in June reached a record $2.13 trillion.

G-20 leaders agreed to establish a “framework for strong sustainable and balanced growth,” according to their draft statement. That could see China boosting domestic demand, the U.S. saving more and Europe increasing investment in an effort to even out the lopsided flows of trade and capital that contributed to the credit boom and subsequent bust.

Hu said today that efforts to promote a more balanced economy should take a variety of forms, and is not related simply to imbalances in savings and consumption or exports and imports in particular countries.

“More importantly, it manifests itself in the imbalances in global wealth distribution, resource availability and consumption and the international monetary system,” Hu said. “The root cause is the yawning development gap between north and south.”

Hu also highlighted the danger of environmental imbalances, calling for technology transfer “to avoid a new ‘green divide’” between developed and developing countries.

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