Chen sees climb in yuan's exchange rate to be gradual
By Langi Chiang and Simon Rabinovitch |
March 9, 2010, Tuesday
|
Print Edition
Print Edition
ANY rise in the yuan's exchange rate will be gradual, China's trade minister said yesterday.
Commerce Minister Chen Deming said a halt to the yuan's appreciation since mid-2008 was part of a panoply of pro-growth policies to prop up the economy during the global credit crunch.
"Exiting from the stimulus does not mean all these measures will disappear. They will still be there, but there will be some fine-tuning," Chen said on the sidelines of the annual session of the National People's Congress in Beijing.
"The movement and degree of stability in the yuan in times of crisis ought to be different from when there is no crisis," he said. But he added: "The direction of yuan reform will be gradual and controlled."
Central bank Governor Zhou Xiaochuan, speaking last Saturday, also stressed the need for policymakers to proceed with caution.
Chen also said Chinese exports would not truly recover until the global economy had put the crisis fully behind it.
"If external demand has not recovered yet, how can we have a fundamental recovery?" Chen said.
Wu Xiaoling, a former central bank vice governor, agreed China would not focus on medium-term market-oriented reforms, including greater yuan flexibility, until global markets have stabilized.
Wu mused that the yuan might not necessarily be undervalued if China's natural resource and labor costs matched global levels.
"A country's currency rate is decided by market supply and demand in the short term. Fundamentally, it has also something to do with domestic prices," she told a news briefing.
Separately, a top state banker said any speculation China might stop backing the United States dollar in the next few years was "absolute nonsense".
Li Ruogu, chairman of Export-Import Bank of China, a lender tasked with supporting the country's foreign investments, said the country should aim to stabilize the dollar and preserve its status as the leading global currency.
China has US$2.4 trillion in official reserves, the largest stockpile in the world, and bankers believe about two-thirds of the total is invested in dollar assets.
"As China has a huge sum of reserves, a dollar collapse would bring nothing good to China," Li said.
Commerce Minister Chen Deming said a halt to the yuan's appreciation since mid-2008 was part of a panoply of pro-growth policies to prop up the economy during the global credit crunch.
"Exiting from the stimulus does not mean all these measures will disappear. They will still be there, but there will be some fine-tuning," Chen said on the sidelines of the annual session of the National People's Congress in Beijing.
"The movement and degree of stability in the yuan in times of crisis ought to be different from when there is no crisis," he said. But he added: "The direction of yuan reform will be gradual and controlled."
Central bank Governor Zhou Xiaochuan, speaking last Saturday, also stressed the need for policymakers to proceed with caution.
Chen also said Chinese exports would not truly recover until the global economy had put the crisis fully behind it.
"If external demand has not recovered yet, how can we have a fundamental recovery?" Chen said.
Wu Xiaoling, a former central bank vice governor, agreed China would not focus on medium-term market-oriented reforms, including greater yuan flexibility, until global markets have stabilized.
Wu mused that the yuan might not necessarily be undervalued if China's natural resource and labor costs matched global levels.
"A country's currency rate is decided by market supply and demand in the short term. Fundamentally, it has also something to do with domestic prices," she told a news briefing.
Separately, a top state banker said any speculation China might stop backing the United States dollar in the next few years was "absolute nonsense".
Li Ruogu, chairman of Export-Import Bank of China, a lender tasked with supporting the country's foreign investments, said the country should aim to stabilize the dollar and preserve its status as the leading global currency.
China has US$2.4 trillion in official reserves, the largest stockpile in the world, and bankers believe about two-thirds of the total is invested in dollar assets.
"As China has a huge sum of reserves, a dollar collapse would bring nothing good to China," Li said.
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