(Bloomberg News) Labeling China a currency manipulator, as Republican Mitt Romney has pledged to do if elected president, "may have a disruptive impact" on global markets, according to Pacific Investment Management Co. Chief Executive Officer Mohamed El-Erian.

"There's merit in saying that so far China hasn't stepped up to its global responsibilities," El-Erian, also the co-chief investment officer of the world's largest manager of bond funds, said on Bloomberg Television's "In the Loop" with Betty Liu. China "believes that its national responsibilities come ahead of its global responsibility. We also have to remember that from the Chinese perspective, they are operating in a global economy that is dominated by the west."

Romney, in yesterday's town-hall style debate with President Barack Obama at Hofstra University in Hempstead, New York, said he would label China a currency manipulator on his first day in office, allowing him to use tariffs if needed to protect U.S. manufacturers. U.S.-China ties could be hurt if the last two debates between Obama and the Republican challenger turn into a "China-bashing competition," the official Xinhua News Agency said Oct. 16.

"I suspect on China, he would find out what other have found out, which is that you have to move slowly because let's not forget that China is the biggest holder of Treasuries outside of the Federal Reserve," El-Erian said. "Mr. Romney has a point, but I think the Chinese would say it's not a level playing field on the other side either."

IMF Board

Starting next month, some western European countries are realigning to give nations such as Turkey and Hungary more say under a 2010 pledge to give up two seats on the International Monetary Fund's 24-seat executive board. The agreement makes China the fund's third-largest member country. It hasn't yet come into effect, mainly because the U.S., the IMF's largest shareholder, has not ratified it.

The U.S. hasn't yet labeled China a currency manipulator in the Treasury Department's twice-yearly reports on the foreign- exchange policies of U.S. trading partners, continuing a practice from the administration of George W. Bush. The yuan appreciated to 6.2543 per dollar today, the strongest since policy makers united official and unofficial rates in 1993. The currency has appreciated 0.65 percent this year.

Trade data released Oct. 13 indicated that the value of China's exports to the U.S. exceeded its imports from the nation by about $21 billion in September. U.S. Treasury Secretary Timothy F. Geithner said in Tokyo on Oct. 13 that while "some progress" has been made toward a more balanced economic relationship with China, more is needed.

'Critical Question'

Romney has also said that he would replace Fed Chairman Ben S. Bernanke if elected. Doing so may also cause a disruption in financial markets, El-Erian said from Pimco's headquarters in Newport Beach, California.