Ngaire Woods, professor of international political economy, director of the Global Economic Governance Programme at Oxford University. [Photo/chinadaily.com.cn]

London - Even if China allows the yuan to appreciate rapidly, it won't alleviate US economic woes, a British leading professor of international political economy has said.

"There is no persuasive evidence to back the view that the unemployment or trade imbalance in the US could be solved by the appreciation of yuan," Ngaire Woods, director of the Global Economic Governance Programme at Oxford University, told China Daily in an exclusive interview.

The Chinese currency exchange rate has been taken as an international issue by many developed countries, especially the US.

Washington wants Beijing to allow the yuan's value to appreciate to make US exports more competitive. On Feb 10, a group of 101 US lawmakers in the House of Representatives launched a new bill aimed at pressuring China to let the yuan appreciate in value.

Commenting on this, Woods said: "They would better use their energies pressing for control of US deficit (support for reforms of healthcare, defence and other massive and inefficient expenditures)."

The US should press for financial regulation which would reduce the vulnerability of American workers to financial crises and push a positive strategy for its growth, she added.

"An appreciation will help regional competitors to China and other Emerging Market Economics (EMEs), but not the US," said Woods.

She said that emerging economies may not side with the US because they are concerned that its quantitative easing policies will put pressure on them — driving up their currencies and reducing their competitiveness with China.

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"Most in the US do not see (or recognize) that the challenge for China is enormous," said Woods.

China is facing three transitions, including spreading growth to all regions and within regions; the banking and financial sector; currency and international markets, Woods noted.

When it comes to China's role in the international economy and in the G20 system, Woods said that "China is adapting to being a great power".

This means three things, Woods elaborated; China is developing its own international strategy and priorities; China is taking up a larger seat at the table of international organizations and China is also developing its own global diplomacy, with individual countries as well as groups.

Looking to the future, Woods is optimistic about China's development. "The biggest change I foresee in the next few years is the transformation of 'Made in China'," she said.

In her opinion, until now "Made in China" has meant only produced in China, but designed abroad, patented abroad, financed from abroad, marketed abroad etc.

However, Woods forecasts: "China is gradually patriating each of these elements. In the coming years 'Made in China' will be like 'Made in Italy' in the fashion industry."

Developing countries' voice

Developing countries should play a bigger role in the international economic system, said Woods, who also suggests the US' IMF veto power be lifted.

"The world needs developing countries to have greater representation and voice in the international economic system," Woods said, adding that this is to "ensure that developing countries 'buy into' international norms and rules".

She said a bigger role of developing economies will also "ensure a wider range and plurality of stakes and interests are represented in global decision-making".

"For example," Woods added, "emerging economy governments have done a better job at representing the needs of industry than have industrialized country governments with powerful financial services sectors."

"For the IMF to do its job," she said, "it needs the major economies, including China, Brazil, India, etc, to trust that the agency is as much theirs as it is the US's."

"That means getting rid of the US veto and shifting voting power yet more," Woods said.

Currently important decisions require a supermajority of 85 percent of votes, and the US has a 17 percent share within the IMF.

*See more paper of Ngaire Woods，please visit: http://www.globaleconomicgovernance.org/wp-content/uploads/Woods-2010-The-G20-and-Global-Governance.doc.pdf