China's PM insists on 'stable' yuan<\/p>\n
Cindy Sui, Agence France-Presse\/Tianjin, China<\/p>\n
Chinese Prime Minister Wen Jiabao on Sunday insisted China should
\nmaintain a "stable" yuan, arguing the time was not right for yuan
\nflexibility, countering growing pressure from the United States.<\/p>\n
Wen told a gathering of Asian and European finance ministers a
\n"basically" stable yuan exchange rate was in the interests of
\nboth China and other nations.<\/p>\n
"Keeping the yuan exchange rate basically stable at a
\nreasonable and balanced level is in the interest of economic
\ndevelopment not only in China but also in neighboring countries
\nand in the region as a whole and contributes to world financial
\nstability and expansion of trade," Wen said.<\/p>\n
He was speaking at the annual Asia-Europe Meeting (ASEM) of
\nfinance ministers in the northern Chinese city of Tianjin.<\/p>\n
The yuan has been pegged around 8.28 to the U.S. dollar for a
\ndecade, giving rise to growing chorus of complaints from
\ncountries believing the Chinese currency is now too cheap and
\ngives the nation's exporters an unfair advantage.<\/p>\n
Fending off pressure, the Chinese premier said every country
\nwas entitled to choose an exchange rate mechanism suitable for
\nits own conditions.<\/p>\n
He said China's exchange rate reform would have to take place
\nbased on an "independent initiative" from Beijing, in a
\ncontrolled manner and as a result of a "gradual process," warning
\nagainst "undue haste."<\/p>\n
"By 'independent initiative,' we mean to independently
\ndetermine the modality, content and timing of the reform in
\naccordance with China's needs for reform and development," Wen
\nsaid.<\/p>\n
"We must take into consideration both the present needs and
\nthe future development and guard against undue haste."<\/p>\n
Wen acknowledged China needed to develop a more market-
\noriented and flexible exchange rate system, but cautioned that
\nsince any reform will have far-reaching impact, "it still
\nrequires a great deal of preparation."<\/p>\n
China must first take into account the possible impact on the
\ncountry's macro-economic stability, economic growth and job
\nmarket, as well as the state of its financial system, he said.<\/p>\n
Other factors include the level of financial regulations,
\nresilience of the enterprises and effect on foreign trade as well
\nas the economic and financial performance of other countries, he
\nsaid.<\/p>\n
"We must push forward the reform but always stay on top of the
\nchallenges, so as to prevent fluctuations in the financial market
\nand economic instability," Wen said.<\/p>\n
He said China's attitude was "responsible" and will be
\nbeneficial to China's and the global economies.<\/p>\n
China has been under heavy pressure from the U.S. and sometime
\nEurope to ease the peg.<\/p>\n
Washington has blamed the yuan's peg on its ballooning trade
\ndeficit with China. Two U.S. senators are sponsoring a bill that
\nwould slap a 27.5 percent tariff on Chinese imports if Beijing
\ndoes not take meaningful steps to revalue the yuan.<\/p>\n
Japan's finance minister Sadakazu Tanigaki urged China to
\nadopt yuan flexibility "sooner rather than later" during a
\nmeeting with his Chinese counterpart on the sidelines of ASEM on
\nSaturday.<\/p>\n
European finance policy makers, however, indicated Sunday they
\nwere beginning to support China's view.<\/p>\n
"I think it's up to the Chinese authorities to decide at what
\nbase and when they will adopt decisions in that direction," said
\nJoaquin Almunia, European Commissioner responsible for economic
\nand financial affairs.<\/p>\n
"I think they are perfectly cognizant of what are the demands
\nof the other main economies of the world, what are the needs of
\nother economies, but they are in charge of the Chinese economy
\nand they know perfectly well what to do and when to do it."<\/p>\n
Wen on Sunday also called for Asia and Europe to pool efforts
\nand adopt policies to "maintain the stability of the major
\nreserve currencies, curb big fluctuations in oil prices and
\nprevent the rise of trade protectionism in all forms."<\/p>",
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