China: No currency policy shift soon

Chinese Premier Wen Jiabao has rejected foreign pressure for an immediate shift in China's currency regime, saying China would set its own timing for reform and warning against what he called undue haste.

    Wen: The long-term goal is a floating exchange rate system

    In a speech before Asian and European finance ministers on Sunday, Wen said China would "independently determine the modality, timing and content of reforms".
     
    He was speaking a day after Japanese Finance Minister Sadakazu Tanigaki said it would be in China's interest to quickly move to a more flexible exchange rate system.

    Wen reiterated that China's long-term goal remains what he called a "market-based, well managed and floating exchange rate system".
     
    He also said the goal of that system is to keep the exchange rate of the Chinese yuan "stable at a reasonable and balanced level".
     
    Currency regime

    US officials have also consistently called for China to move forward on changing its currency regime, which keeps the yuan's value fixed in a close range around 8.28 to the US dollar.

    US manufacturers say the yuan
    is undervalued by up to 40%

    US manufacturers contend that China's fixed currency system has undervalued the yuan by as much as 40%, making Chinese products cheaper in the domestic market and American goods more expensive in China.

    Wen said any reform to the Chinese currency system would have to take into account not only the possible effect on neighbouring countries, but also the affect on China's financial system and foreign trade.

    It "still requires a great deal of preparation for all sides to sustain the possible impacts", he said.

    Wen made his remarks during a keynote speech at the opening of the Sixth Asia-Europe Finance Ministers Meeting in the northern Chinese city of Tianjin.

    SOURCE: Agencies


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