Officials react angrily to US moves on yuan
BOAO: China's top financial officials reacted to re-emerging calls from across the Pacific to force China to revalue its currency by saying it was China's own business and others should mind their own.
The remarks won wide support from international financial officials at the Boao Forum for Asia.
China sees its domestic development as the most important aspect in deciding its foreign exchange policy and does not "pay attention solely to the trade deficit of certain countries," Wen Benhua, deputy director of the State Administration of Foreign Exchange, said yesterday in a panel discussion at the forum.
But he added that the country would take into account any impact a revaluation would have on its neighbouring countries should it decide to move in this regard.
The same day, central bank chief Zhou Xiaochuan said China had its own procedures for reforming its foreign exchange system.
The comments were clearly directed at the US Congress and its proposal to take punitive measures against what the United States believes is an undervalued renminbi.
Wei said the US trade deficit was fundamentally the result of a flawed US economic policy. In addition, China's trade surplus should be seen from a multilateral angle, and not just from the perspective of bilateral trade, he said.
"Don't forget China has a deficit with Japan, some ASEAN countries, and a number of European countries. We need to consider the issue in a worldwide context," he said.
Wei said he discussed the issue with US financial officials recently, telling them: "This (trade deficit) is your problem. You need to put your own house in order before you blame your neighbour."
A flexible foreign exchange rate system is generally a good thing, but "one does not do it for the wrong reason," said Roberto de Ocampo, president of the Asian Institute of Management and the Phillipines' former secretary of finance.
He said many of China's exports were partly processed in other parts of Asia although the final products were assembled in China.
"Unfortunately, this particular relationship among countries in Asia is not appreciated by those pressuring for a revaluation of the Chinese currency, to the point that even now there are discussions in the US Congress for protectionist measures in the form of legislation involving tariffs and so forth directed at China.
"That is the wrong solution to a misread problem."
China should continue to strengthen its financial sector before making significant moves in its foreign exchange management, he said.
"(China should) not start from a conclusion about its exchange rate and work from there to the financial sector. It should be the other way around," he said.
Khempheng Pholsena, vice-president of the Asian Development Bank, said she has every confidence in China's ability to make a decision on foreign exchange system reform.
"When and how much (China will change its foreign exchange system), is up to the PRC (People's Republic of China). The PRC has the wisdom," she said.
(China Daily 04/25/2005 page2)