Meeting finance ministers of Asia and Europe, Premier Wen Jiabao, repeated code words for future intervention: "independently"; "in a controlled manner"; "gradually"
Beijing (AsiaNews/Agencies) Chinese Prime Minister Wen Jiabao said "there is no hurry" to revalue the national currency, the yuan. During yesterday's (26 June) opening ceremony of the sixth meeting between finance ministers of Asia and Europe, which took place in Tianjin (a port in northern China), Wen reiterated that any intervention will be decided "independently", and specifically "in line with the requirements of China's reform and development".
The prime minister insisted that any reform will take place in a "controlled manner" to avoid unforeseen outcomes like "fluctuations on the financial market and economic instability" and "with gradual progress" to protect the development of the Chinese economy. Having a stable yuan, he added, is "in the interests of China and the entire world"; it is "a support to the stability of commerce and to the increase of trade capacity in neighouring countries and in the whole world".
"In short, we need to improve the exchange rate, introducing a mechanism of exchange which is linked to the market and more flexible," added the prime minister. This therefore excludes the simple revaluation demanded by the USA. Significantly, he then outlined the possibility of wider commercial trade, financial ties and closer collaboration among the economies of Asian and European states.
The United States takes a different stand; for months, it has been pressing China to revalue its currency, which since 1994 has stuck to an exchange rate of 8.28 yuan per US dollar. Washington says the rate is very inferior it claims by 40% to its actual value. This subsequently puts Chinese goods which are inexpensively priced at an advantage, and it also leads to a distortion of market mechanisms. The US parliament is currently considering laws which would impose taxes on the export of Chinese goods, if Beijing does not adjust the exchange rate of the yuan to correspond with its true market value. (PB)