US Treasury Secretary Henry Paulson's ongoing China visit has stirred much
debate about a possible appreciation of the renminbi.
But instead of pushing hard for the revaluation of the Chinese currency,
Paulson, the former Goldman Sachs chief executive officer and an expert on
Chinese business issues, may focus more on the practicalities of financial
reform and trade during his visit, experts said.
"Paulson has a solid understanding of China," said Zhu Jianfang, a senior
macroeconomic analyst at China Securities Research Co Ltd. "He is more practical
and should be able to find more common ground with the Chinese officials."
Having visited China around 70 times in the last seven years during his time
at Goldman Sachs, Paulson took the position as Treasury Secretary in the George
W. Bush administration at the end of May. He began his first official visit to
China in this capacity Tuesday.
Paulson's first stop was Hangzhou, capital of East China's Zhejiang Province,
where he met with local officials and entrepreneurs. He will stay in China until
Paulson arrives in Beijing this morning and will meet Ma Kai, minister of the
National Development and Reform Commission, followed by Vice-Premier Wu Yi later
in the day. Paulson and Wu will hold a joint press briefing in the evening.
During his visit Paulson will also meet President Hu Jintao and other
high-ranking Chinese officials in the areas of finance, commerce and the
Paulson met with China's central bank governor Zhou Xiaochuan at the annual
meeting of the International Monetary Fund in Singapore earlier this week.
"Of course the renminbi issue will remain one of the major interests for US
officials like Paulson and should be discussed with the Chinese side during the
visit," said Wang Yuanhong, an economist at the State Information Centre.
But going on previous communication, neither side is in a hurry to reshuffle
the renminbi exchange rate scheme. And it should be obvious to Paulson, given
his understanding of China, that a drastic appreciation of the renminbi will
bring little resolution to China's trade surplus with the United States, Wang
Before he left for China, Paulson said in Singapore on Monday that moving
toward a freely traded currency is in China's interests. But, "I am not looking
for immediate solutions or quick fixes ... I am looking to set a tone and an
expectation of working through issues and making progress," he told reporters.
Zhou Xiaochuan also made it clear in Singapore that China is gradually moving
toward a flexible exchange rate regime.
The renminbi, or yuan, reached its strongest level against the US dollar
yesterday since China appreciated the currency by 2 per cent in July 2005 and
linked it to a basket of foreign currencies instead of to the US dollar alone.
The central bank set the daily reference rate for the yuan at 7.9342 when traded
against the dollar yesterday, compared to 8.11 upon last year's revaluation.