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Strategies & Market Trends : HONG KONG -- Ignore unavailable to you. Want to Upgrade?

To: MikeM54321 who wrote (1690)	5/26/1998 3:44:00 PM
From: WONG	Read Replies (2) \| Respond to of 2951

China won't devalue yuan U.S. Treasury supports decision; Rubin calls China 'island of stability' May 26, 1998: 3:16 p.m. ET WASHINGTON (Reuters) - China's finance minister said Tuesday that Asia's financial crisis had put great pressure on China's economy, but he assured Washington that Beijing would not devalue its currency. "China's economy has come under enormous pressure because of the crisis," Finance Minister Xiang Huaicheng said in a statement ahead of a meeting with U.S. Treasury Secretary Robert Rubin. Xiang added: "China's government has upheld a responsible position on committing to not devalue (its currency)." Rubin said he agreed with Chinese officials that devaluing China's currency was not in the country's best interest and might threaten regional trade and investment. "China's leaders have reaffirmed their exchange rate policy, which we feel is appropriate in light of regional developments," Rubin said in a statement. "While there is speculation in the press and the financial markets suggesting that China might benefit from a devaluation, we frankly do not see the basis for their arguments." In advance of the meeting, Rubin said, "We agree . . . that a devaluation would not be in China's best interests, that it might threaten trade and investment flows and could invite a return of inflation as well, of course, as having a major impact on the other currencies in the region, including that of Hong Kong." By maintaining its exchange rate policy, Rubin said China has been an "important island of stability in a turbulent region." Rubin said neither China nor the United States should take recent economic successes for granted. "Rather, we should learn from the experience of the crisis countries, which have demonstrated to us the importance of sound macroeconomic policies, strong financial sectors and transparency," Rubin said. China expects to meet growth target Despite economic turmoil in the region, the finance minister predicted China would meet its economic growth target of 8 percent for this year and its inflation target of under 3 percent. "We are fully confident about economic performance in 1998," Xiang said. He said Beijing was "taking active measures" to shrink its trade surplus with the United States. "The present market in China is the most open in history and China is willing to see a gradual increase in U.S. exports," Xiang said. He also pressed Washington on China's accession to the World Trade Organization. "There should be early accession of China into WTO. China has met demands for membership," he said. Rubin said China belongs in the World Trade Organization, and that its accession would benefit the United States. But he said China had to do more to win entry. "There has been encouraging progress on the issue, although much remains to be done," Rubin said. "I hope that there will soon be significant additional progress." As part of accession, Rubin said he hoped to craft an agreement giving U.S. banking, securities and insurance firms greater access to Chinese markets.