|
Officials: No rush on yuan reform
(Agencies)
Updated: 2005-01-30 09:20
China told the world on Saturday it will not rush to reform its exchange
rate.
Senior officials attending the World Economic Forum said currency reform
steps would come eventually but the world would have to wait for China to take
them at its own, gradual pace.
For over a year now, top industrial nations have been urging China to let its
yuan currency strengthen to help balance global growth and resolve a massive
U.S. current account deficit.
"The world economic imbalance is attributable to many reasons, but not the
exchange rate," Li Ruogu, China's deputy central bank governor, told the World
Economic Forum. "China has not the capacity to address that so-called imbalance.
We are not willing to do it, and we are not able to do it."
A more flexible exchange rate for China, along with dollar weakness triggered
by U.S. trade and fiscal deficits, will be hot topics at a G7 meeting starting
in London on Friday. China's central bank officials and finance minister will
attend.
Huang Ju, China's vice premier in charge of financial and banking issues,
told the Davos gathering that before acting on exchange rates, China needs to
make further progress on cleaning up its ailing banking system and opening up
its capital markets.
"We do not have a specific time frame," Huang said. "To improve the exchange
rate mechanism, we have to maintain the exchange rate at a reasonably stable
level."
He added any adjustment to the currency peg would come in a "gradual,
steadfast" manner.
But a top European central banker said China need not wait to complete its
financial market reforms before acting.
"It is true we need to strengthen financial markets. But that does not rule
out that you may realign parities," Bundesbank President Axel Weber, who will
attend next week's G7 meetings, told Reuters Television.
China's central banker Li, however, pointed to no need for an FX move soon.
He said there were no signs that China's economy, which grew by over 9 percent
last year, was seriously overheating, and went as far as ruling out another
increase in official lending rates for the time being.
He said any rate rise now would make it more difficult to create enough jobs
for the millions of migrant workers and poor farmers moving to China's cities
every year.
"So far data does not give us strong reasons for further interest rate
increases at this point," said Li. The central bank had increased official
lending rates modestly last October, the first such move in nearly a decade.
"There's a tremendous task to make people have jobs, therefore a certain
growth rate is extremely important. Our goal is to keep the economy growing at
roughly 8 percent," Li added.
UNDER PRESSURE
While Asian officials have said they worry that floating the yuan too soon
might undermine the still-fragile Chinese banking sector, China has come under
immense pressure from the United States and Europe to allow its currency to
appreciate.
They have urged China to loosen its currency, which is pegged at about 8.28
to the U.S. dollar.
U.S. Treasury Undersecretary John Taylor told the Forum that China was taking
steps toward currency reform, such as developing futures markets.
European Central Bank President Jean-Claude Trichet told the gathering of
business and political leaders that the euro's recent strength was hurting
growth in the 12-nation euro zone.
Business leaders, however, indicated that they saw no immediate end to the
dollar's slide.
Bill Gates, founder of Microsoft and the world's richest man, said he was
expecting the dollar to fall further.
"The old dollar, it's going to go down," he said.
| |
 |
|
|
|
|
Today's
Top News |
|
|
|
Top China
News |
|
|
|
|
|
|
|
|
|
