Chinese President Hu Jintao will hop on a plane tomorrow and arrive in Washington on Wednesday to talk to U.S. President Barack Obama about a number of issues, most of which will, in some way or another, be related to the value of the yuan.

After making a barrage of announcements in recent weeks about further liberalizing trading in the Chinese currency, small steps on the road to it becoming freely convertible sometime this decade (maybe), the tightly controlled yuan reached a new all-time high against the dollar last week as it often does prior to Chinese officials meeting with important heads of state who, almost unanimously, think the currency is undervalued.

So, given all this recent good will, it comes as something of a surprise that the media-shy Hu would take this opportunity to respond to questions posed by U.S. newspapers in which he characterized  the current dollar-based global monetary system as  a sort of relic of a bygone era. Well, those werent’ his exact words… Here’s the relevant Q&A s it appeared($) in the Wall Street Journal today and this related WSJ story is worth a look as well.

4. What do you think will be the U.S. dollar’s future role in the world? How do you see the issue of making the RMB an international currency? Some think that RMB appreciation may curb China’s inflation, what’s your view on that?

A: The current international currency system is the product of the past. As a major reserve currency, the U.S. dollar is used in considerable amount of global trade in commodities as well as in most of the investment and financial transactions. The monetary policy of the United States has a major impact on global liquidity and capital flows and therefore, the liquidity of the U.S. dollar should be kept at a reasonable and stable level.

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