Currency's value rise considered 'reasonable'
Updated: 2011-11-05 09:33
By Zhang Chunyan (China Daily)
CANNES, France - The renminbi is coming close to having a reasonable exchange rate, Chinese Commerce Minister Chen Deming said at the G20 summit.
Chen told reporters on Thursday that the yuan has risen by about 30 percent against the US dollar since 2005, and China's trade surpluses are declining when compared with the value of its gross domestic product.
In September, selling pressure appeared for the yuan, showing that the market perception of the currency is starting to change, Chen added.
The Chinese yuan closed at a record high against the dollar on Friday. Its reference rate was set at 6.3165 on Friday, the highest it has been since July 2005.
Chen said the eurozone troubles have not had a big effect on China's exports to that region, but said he expects that they will affect global trade more as time goes on.
The world and China have an interest in helping Europe overcome the difficulties, he said.
China will concentrate on importing more from Europe, Chen added.
China has long faced pressure from the US and other Western nations to allow the value of its yuan to float more freely, but it has refused to bow to those demands.
"The renminbi should appreciate in a controlled way," Yao Shujie, head of the UK-based University of Nottingham's school of Contemporary Chinese Studies.
China's economy still has many obstacles it must overcome if it is to grow more. Those include its shortage of energy, dependence on manufacturing and its production primarily of low-tech goods, Yao said.
"Rapid appreciation will hit exporters, and particularly medium-sized and small enterprises," Yao said.
Yao said world leaders should try to understand the difficulties that a rapid currency appreciation will impose on China and recognize that any harm done to the country's economy will harm the world as well.
"Allowing the currency to move at a faster pace is not the ultimate solution to China's core problems," said Simon Derrick, head of currency strategy at BNY Mellon, a New York-based investment management and investment services company.
"It therefore seems to me that these latest developments in monetary policy in the US and elsewhere only increase the pressure on China to pick up the pace of currency liberalization," Derrick said.
G20 leaders met in Cannes on Thursday and Friday to discuss Europe's work to deal with its debt crisis and revise their plans for rebalancing the world economy.
Chen also published an article in the Daily Telegraph on Thursday, saying China is doing its part to rebalance global trade by stoking domestic demand and cutting import tariffs.
Chen wrote that other countries should not think that they can improve their domestic conditions by criticizing China's trade and currency arrangements and resorting to protectionism.
"Rather, they could negate our efforts to expand imports, crush global market confidence and cast a dark shadow over the recovery prospects of the world economy," Chen said.
As China takes steps to further open its economy, it is expected to bring in more than $1.7 trillion worth of imports this year and about $10 trillion during the next five years, Chen said.
Cecily Liu contributed to this story.