Central bank rejects IMF yuan advice

Central bank rejects IMF yuan advice

By Bing Lan (China Daily)Updated: 2007-04-16 06:44

A senior central bank official has rejected calls for a quicker increase in the flexibility of the renminbi (人民幣) exchange rate, saying the currency's role in rectifying(矯正) global economic imbalances should not be exaggerated(過大).

Hu Xiaolian, deputy(代表) governor of the People's Bank of China, said more attention should instead be paid to growing protectionism(保護貿易主義) to safeguard(保護) the health of the world economy, according to a central bank statement and Xinhua.

She was speaking in Washington on Saturday at a conference during the semi-annual meetings of the International Monetary Fund (IMF) and the World Bank. The meetings are a venue(發生地) for key financial officials of the two institutions' member countries to discuss global economic issues.

Officials and economists at the IMF, which has a mandate(命令) to safeguard the global economy and render advice to member countries, said that Beijing should pursue a more flexible exchange rate, for the sake(目的、利益) of both the Chinese economy and a more balanced global economy.

However, China did not seem to see the advice as being appropriate. "The fund... should respect its member countries' core interests and actual economic fundamentals," Hu was quoted as saying.

"Biased advice would damage the fund's role in safeguarding global economic and financial stability."

In July 2005, China abandoned(被放棄) the renminbi's decade-old peg to the US dollar and let the currency appreciate by 2.1 per cent. Since then, it has gained almost another 5 percent against the dollar.

However, there has been a persistent international chorus(異口同聲地說), led by the United States, arguing that China has not been moving quick enough in letting its currency rise.
US lawmakers have said that the country's trade deficit was partly caused by what they believed an undervalued Chinese currency.

Chinese officials say the yuan's flexibility would gradually increase but argue that radical steps would generate shocks in the Chinese economy which could spread to the rest of the world.
"The IMF... should attach significance to stability of domestic economies (of member countries) when observing their contribution to outside stability," Hu said.

She said the IMF should strengthen surveillance(監視) over the soundness of economic policies of countries whose currencies are used as major instruments in other countries' foreign exchange reserves. She was clearly referring to the US, whose low savings rate, and fiscal and trade deficits are agreed to be a key cause for global economic imbalances.

Hu also called attention to what is seen as a rising protectionist sentiment(意見、觀點), which has been causing troubles for China's exporters.

"We call on all countries to harness(利用) the opportunities created by globalization... and resolutely(堅決地) oppose protectionism," she said.



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