China has reformed its foreign exchange regime with utmost
responsibility, and further reforms will be pursued in accordance
with evolving national and international conditions, analysts have
said.
Currency is expected to be one of the subjects atop the agenda
of the third China-US Strategic Economic Dialogue (SED) scheduled
for December 12-13.
The US and the EU, which blame their trade deficit on China's
foreign exchange rate, have stepped up pressure on the country to
revalue its currency at a faster pace.
"The pace of change has accelerated, but they need to move it
more," US Treasury Secretary Henry Paulson said last week,
referring to China's exchange rate.
Some US Congressmen have proposed more than 50 legislative bills
related to China-US economic ties.
"China should listen to other partners' concerns, but they
should also listen to what China has to say," Renmin University of
China's finance professor Zhao Xijun said.
"The SED is not a negotiating table but a forum at which the two
sides can better understand each other and understand the logic
behind their respective policies," Zhao said.
Since the landmark foreign exchange reform in July 2005, when
China depegged the yuan from US dollar and shifted it to a basket
of foreign currencies, the yuan has gained 11.9 percent. And it has
risen 8 percent since Paulson became US Treasury Secretary in July
2006.
The exchange rate policy, Zhao said, has to conform to changing
domestic and international conditions and should be worked out in
the best interest of the world economy instead of just a single
economy - be it the US or the EU.
The country's currency reform, analysts say, needs time. "When
the conditions warrant quick revaluation, we can move quickly; and
when they are suitable for slower revaluation, we have to move
moderately," Zhao said. "The pace should depend on the conditions
and not be set arbitrarily."
Revaluation of the yuan, some experts argued, would not
necessarily reduce China's trade surplus and its foreign currency
reserves.
"The processing industries, many of which import parts and
export finished products, are the main drivers behind China's trade
surplus so the appreciation would not necessarily curb it because a
revaluation could also make the imported parts cheaper, and
encourage the processing industries to import more," China Galaxy
Securities chief economist Zuo Xiaolei said.
Some Chinese experts, however, favor a "speedy revaluation" of
the yuan. "The relatively speedy revaluation (of the yuan) can help
curb inflation, which has been rising," Peking University professor
Xia Yeliang said.
(China Daily December 11, 2007)
