China central banker says no need to
devalue yuan
BEIJING, Aug 11 (Reuters) - China does not need to devalue its
yuan, or renminbi, currency, Liu Mingkang, deputy governor of the
People's Bank of China, the central bank, said on Tuesday.
''The renminbi does not need to be devalued and will not be
devalued,'' Liu told reporters.
While a devaluation could help boost exports, China would pay the price in higher costs for
imported raw materials and components and inflation, Liu said.
''A drastic devaluation could bring about a short-term export recovery but it will not help China's
long-term strategic competitiveness,'' Liu said.
''A devaluation of the currency will also lead to a loss of confidence in the currency by the public
and will also bring about inflation,'' Liu said.
''We think that devaluation or minor adjustment of the exchange rate is not a good measure for
China,'' Liu said.
Economists say a yuan devaluation could spark another round of devastating currency devaluations
across Asia and further drag the region's beleaguered economies into recession.
''A drastic devaluation will surely deal a severe blow to other countries and economies, particularly
those already suffering from financial crisis,'' Liu said.
Although Beijing has repeatedly pledged not to devalue the yuan, Chinese and regional markets have
been spooked by fears that it could do so if the Japanese yen continued to weaken.
''We are fully capable of maintaining the exchange rate of the renminbi,'' Liu said.
''We will adopt necessary measures to maintain the stability of the yuan exchange rate,'' Liu said.
On Monday, China's central bank intervened in the tightly controlled foreign exchange market to
support the yuan amid worries over the fate of the Japanese yen.
The bank has waded into the market several times over the past few months to support the yuan.
Beijing has also voiced displeasure with Tokyo's inability to enact policies to support the yen and
help speed the recovery of Asian economies.
Asked how much the central bank had spent on defending the yuan, Liu said: ''I can't disclose the
figures.''
Liu said foreign and domestic currency speculators were ''not wise in their practise.''
''I advise speculators not to miscalculate,'' he said without elaborating.
(US$ = 8.3 yuan)
-- Beijing Newsroom (86) 10-6532-1921; Fax (86) 10-6532-4978
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China's President Jiang to visit Japan
Sept 6-11
TOKYO, Aug 11 (Reuters) - Chinese President Jiang Zemin will
make an official visit to Japan from September 6 to 11, the first
Chinese president to do so, the Japanese Foreign Ministry said on
Tuesday.
Jiang's visit is expected to highlight concerns in financial markets
that China may devalue its yuan currency in reaction to the slide in the Japanese yen, a move which
could trigger a spiral of competitive devaluations throughout Asia. The visit will mark the 20th
anniversary of the signing of a Sino-Japanese peace and friendship treaty which normalised relations
between the erstwhile wartime foes.
Japan's chief cabinet secretary, Hiromu Nonaka, told reporters on Tuesday: ''For the past 20 years,
Japan-China relations have made rapid progress in political, economic, cultural, personnel exchange
and various other fields.''
Nonaka said Tokyo hoped the visit would help to further promote bilateral ties.
During his visit Jiang will have an audience with Emperor Akihito and Empress Michiko and hold
talks with newly inaugurated Prime Minister Keizo Obuchi.
''We warmly welcome the visit by the president and his wife as a further deepening of the friendly
relations between our two nations,'' the Foreign Ministry said in a statement.
It will follow Japanese Foreign Minister Masahiko Komura's trip to Beijing last weekend.
Jiang, who last visited Japan in 1992 as Chinese Communist Party secretary-general, will also visit
the northern Japanese cities of Sapporo and Sendai.
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