China, US discuss forex controls
WASHINGTON: China’s central bank governor Zhou Xiaochuan said on Friday he had discussed relaxing Chinese foreign exchange controls with the US Treasury Secretary John Snow, but not a timetable for loosening Beijing’s currency peg to the dollar.
"We ... discussed our technical cooperation to improve financial markets, including foreign exchange markets, in China," Zhou told Reuters as he left the US Treasury after a meeting with Snow.
"We discussed Chinese banking system reform, especially ... for commercial banks, and relaxation of foreign exchange controls in capital accounts," he said.
"Two of these matters, commercial bank reform and relaxation of capital account, (are) to some extent related to the direction in the future we also gradually improve our foreign exchange rate formulation mechanism," he added.
Asked if he had talked about a timetable for relaxing China’s tight currency peg — in place since the mid-1990s —he said this was not on the table and that any discussion of revaluation was for "the next round."
US manufacturers complain the peg keeps the yuan artificially low and gives Chinese exporters an unfair edge.
[What exports can we possibly compete with China on regardless of where the RMB would float? mish]
Zhou also said China’s Premier Wen Jiabao would consider visiting Snow in the second half of this year. The Treasury chief praised Zhou for his efforts to reform China’s financial markets, a US Treasury spokesman said.
"The secretary commended the efforts underway to modernise China’s financial markets and he urged the Governor to continue those reforms," Treasury spokesman Rob Nichols said in a statement.
Nichols said Snow told Zhou he would soon appoint a "high-level attachÈ" to be stationed in Beijing to help facilitate China’s transition to a flexible currency regime.
Snow offered Zhou "the US view that the international trading system works best with free trade, free flow of capital and the flexible market-based exchange rates," Nichols said.
He also told Zhou he was "encouraged" by reports from a Treasury technical cooperation team recently returned from China.
China’s central bank earlier this week said it was tightening credit and requiring weak banks to set aside larger reserves in a move seen as trying to cool the Chinese economy.
Earlier, Zhou met with International Monetary Fund acting head Anne Krueger, a fund official said.
============================================================
[Final question. Assume that China did float the RMB as Snow asked. Further assume that the RMB strengthens as Show wants. What would that do to the price of oil in US terms?
China could presumably get more oil for the less money. Would that be any good for us?]
jang.com.pk |
