Expert warns against blindly revaluing China's currency
January 31, 2005
Beijing - One of China's top statisticians Monday warned against "blindly" raising the value of the yuan, adding to a cacophony of voices out of Beijing commenting on policies for the nation's currency.
"At a time when we're not yet fully prepared, we should not blindly raise the value of the yuan," Zheng Jingping, spokesman of the National Bureau of Statistics, wrote in an article in the China Business Post.
"Up until now, there is still no final conclusion on what would be the most efficient mechanism for determining the exchange rate," he wrote.
Zheng's comments came ahead of a meeting of the Group of Seven finance minister in London this week, which is to be attended by both China's finance minister and its central bank chief with the yuan likely high on the agenda.
Vice Premier Huang Ju told global business leaders over the weekend that China would allow the yuan to float freely at some point but that structural improvements and banking reform were needed first.
"We'll have a phased or step-by-step method to relax the restraints on the cross border trade of currency and gradually realise the convertibility of the (yuan)," he told the World Economic Forum in Davos.
Zheng, in his article Monday, said that the central bank is facing extra difficulties because of the inflow of hot money betting that the value of the yuan, fixed to the US dollar at around 8.30 for a decade, will rise soon.
He noted that $67.5 billion were added to China's forex reserves in the two last months of 2004, interpreting this as evidence of the inflow of large amounts of speculative capital. - AFP
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