Wen: Exchange rate to stay stable
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.