china resists pressure on yuan

China resists pressure on yuan
From correspondents in Tokyo
May 23, 2005
From: Agence France-Presse


CHINA has no timetable for easing the dollar-peg on its yuan currency and will not do so unless conditions are right, Vice Premier Wu Yi said today.
"As for when we will conduct the yuan rate reform, there is no timetable," Wu told a forum in Tokyo. "If the conditions are right, we will conduct reform voluntarily, even without pressure from foreign countries."

"If the conditions are not right, we will not carry out the reforms, no matter how much pressure foreign countries exert," she said. "In a word, we will abide by market rules, but we will not succumb to external pressure."

China has come under pressure, particularly from the United States, to readjust the value of its yuan, which its trading partners say keeps Chinese exports artificially cheap.


In a recent report, the US Treasury condemned what it said was Beijing's "distortionary" currency regime.

Wu acknowledged the general need for reform of the currency as the Chinese economy develops and said China had the technical means in place to revalue the yuan.

"Frankly speaking, the yuan fluctuation band has become tighter since 1997," said Wu, referring to the time of the Asian financial crisis.

"As the economy develops, however, we must conduct yuan rate reform for sure."

"We are now in preparation for the yuan rate reform. We need to have a good economic environment as well as good conditions in order to carry out such reform," she told the forum hosted by the Japanese business newspaper the Nihon Keizai Shimbun.

"The Japanese must still vividly remember," she said, referring to Japan's revaluation of the yen in the 1960s.

"We want to refer to the lessons Japan has learned," she said on a visit marked by tension between Japan and China in part over memories of Japanese occupation.

The process of reforming the yuan "must be placed under strict supervision and management," she said.

The yuan, also known as the renminbi, is pegged to about 8.28 to the dollar.

China's foreign-exchange infrastructure is underdeveloped for an economy its size, with dealings limited to a handful of domestic banks that trade in four pairs strictly for current account purposes only.