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BIZCHINA / Top Biz News
China 'won't bow' to yuan pressure
By Xin Zhiming (China Daily)
Updated: 2007-08-04 09:14
China has been steadily increasing the flexibility of the yuan, but it
will not bow to outside pressure for faster revaluation, Minister of
Finance, Jin Renqing, said.
"The biggest challenge for China is to maintain the sound momentum in its
economic growth," Jin told reporters during the Asia Pacific Economic
Cooperation finance ministers meeting in Coolum, Australia. "China's
currency reform should be self-initiated, controllable and gradual," he
said.
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The two-day meeting, which concluded on Friday, has called for a more
flexible currency regime globally to reduce the global economic imbalance.
Japan has been in the spotlight as the yen has pushed the Korean won to a
decade high and the New Zealand dollar to a 22-year high. It has dampened
exports of both countries.
China has also been pressured by the United States in recent days to pick
up the pace of its yuan revaluation.
The US Senate Banking Committee and Senate Finance Committee have passed
legislation respectively to increase pressure on Washington to force
Beijing to toe the line.
But economists agree that the yuan's revaluation will not be sufficient
to lift the US out of its economic woes.
The US trade deficit as well as that of some other developed countries
have arisen, fundamentally, from their incomplete and poor industrial
structures, Liu Xiahui, an economist with the Chinese Academy of Social
Sciences, said.
"The US has developed to a stage where it does not manufacture much of
the traded goods," he said. "They must be imported from countries with
lower production costs and higher competitiveness."
The increased value of a currency will not do in the future, Liu said,
noting that even the Japanese yen has been revalued drastically, but the
country continues to enjoy huge trade surpluses.
Many economists agree that a freely floated currency will have little
adverse impact on an advanced market with good management expertise, but
it may deal a fatal blow to the developing markets, Liu said.
A hasty reform pace will jeopardize China's economy, economists said.
(China Daily 08/04/2007 page2)
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