China refuses to set time-table on forex

China refuses to set time-table on forex

Reuters, London

Chinese authorities on Saturday again declined to set out a time-
table to make their currency more flexible on the world's money
markets and said they had not come under international pressure
to revalue the yuan.

Major nations and especially the United States have repeatedly
urged China to allow its currency to rise and the Chinese foreign
exchange regime was also in focus at the Group of Seven meeting.

"We are determined to move towards a flexible exchange rate,
but no timetable," Chinese central bank deputy governor Li Ruogu
told reporters.

When asked if China will widen the currency band or swap the
peg for a currency basket, Li said : "We will do whatever I think
is possible."

The yuan has been pegged at about 8.28 to the dollar since the
mid 1990s and critics argue this is to low and gives Chinese
exports an unfair competitive advantage.

China has countered that it will move to a more flexible
currency regime at some stage but only when it has reformed its
shaky financial system, a pledge repeated again at the G7 meeting
of finance ministers in London.

China has already relaxed some curbs on foreign exchange
transactions, including allowing some service firms to retain
more foreign exchange earnings, and made it much easier for
multinationals to deal in hard currency.

The central bank has pledged to push ahead with currency,
interest rate and banking reform in 2005, but repeated its policy
of keeping the yuan "basically stable".

Meanwhile, Bank of Japan Governor Toshihiko Fukui told Reuters
that central bankers at a breakfast on Saturday discussed the
global economic situation including that of China.

Asked how China's economy was performing and whether there was
a concern it might be in for a sharp slowdown or hard landing,
Fukui said: "a landing but not a hard landing."

He said they did not discuss bank restructuring issues in
China or any progress the U.S. had made on its currency account
deficit but focused instead on the outlook for the global
economy.

The World Bank in its quarterly report on China released on
Friday said China's economy is showing signs of cooling, but
acceleration risks remain and Beijing should be ready to raise
interest rates again if needed.

China's central bank governor said on Friday he expected the
Chinese economy to grow by between eight and nine percent in
2005. Economic growth in 2004 was 9.5 percent.