Wen: Exchange rate to stay stable By Chen Xu (China Daily) Updated: 2005-06-27 05:28
China reiterated yesterday that it would keep the renminbi exchange rate
basically stable at a reasonable and balanced level.
Addressing the opening ceremony of the Sixth ASEM Finance Ministers' Meeting
in Tianjin yesterday, Premier Wen Jiabao said a stable yuan exchange rate was in
the interests of economic development not only in China, but also in
neighbouring countries and regions.
A stable exchange rate contributes to world financial stability and the
expansion of trade, he said.
This was illustrated during the Asian financial crisis in 1997, when the
stable renminbi helped alleviate pressure on neighbouring countries and regions
and contributed to economic and financial stability as well as the development
of Asia and the whole world, the premier said.
"Every country is entitled to choose its exchange rate mechanism and policies
suitable to its own national conditions."
China decided in the early 1990s to gradually establish a market-based and
well-managed floating exchange rate system to keep the renminbi exchange rate
basically stable at a reasonable and balanced level.
And the country has worked hard on the reform of its exchange rate mechanism
and made important progress in the past decade and more, he said.
"We must uphold the principles of independent initiative, controllability and
gradual progress in pursuing renminbi exchange rate reform."
The nation will independently determine the modality, content and timing of
the reform in accordance with China's needs and development, he said.
"We should take account of the possible impact of exchange rate reform on the
country's macroeconomic stability, economic growth and job market."
The country will consider the state of the financial system, financial
regulations, the resilience of enterprises and the effect on foreign trade as
well as keep an eye on the economic and financial performance of neighbouring
countries and regions, and of the world as a whole, when reforming its exchange
rate, the meeting heard.
The country will push forward rate reform but also stay on top of the changes
to prevent market fluctuations and economic instability, Wen said.
"We need to continue improving the renminbi exchange rate forming mechanism
and develop an exchange rate system that is more market-oriented and flexible."
However, a great deal of preparation needs to be done to create an
environment for all sides to sustain any possible impacts, since the reform
involves a wide range of areas and will have a far-reaching effect, he said.
And the rapid economic growth seen since China's reform and opening up will
be maintained through tackling existing problems to achieve the long-term,
steady and rapid growth of the economy, he said.
"We can overcome any difficulty and risk on the road ahead and reach our
determined goal of socio-economic development," Wen said, adding that China's
development was conducive to the stability and prosperity of the region, and
peace and development of the whole world.
He made five recommendations including increased
dialogue and co-ordination on macroeconomic policies, more exchanges on
development experience and enhanced technical assistance as well as financial
capacity building to strengthen financial co-operation in Asia and Europe.
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