Wu Jinglian, member of the Chinese People's Political Consultative Conference (CPPCC), accepted an interview by domestic and overseas media Wednesday morning and answered some questions of general concern.
Regarding the exchange rate of the RMB to which the reporters showed great interest Wu's answer was that the RMB would eventually appreciate, but currently there is no timetable.
Wu first reviewed the changes of the exchange rate-formation mechanism of the RMB since the reform and opening up. He said before 1994 China adopted multiple exchange rates system. There were official rate and adjusted rate etc. There were cases in which the RMB had been overvalued. After 1994 exchange rates were combined to form floating an exchange rate system under strict management. After the occurrence of the Southeast Asian financial crisis China's neighboring countries as well as the US hoped that the RMB would not depreciate. China agreed to this request and kept the exchange rate relatively stable, which made contribution to the recovery of economy in Asia and the world.
However, since 2000 the situation began to change again. The Chinese economy is developing well, trade volume is growing and trade balance is also increasing. Meanwhile the RMB began to face appreciation pressure. Faced with this pressure Wu Jinglian believes that the change of exchange rate should be determined by the market demand rather than by excessive governmental intervention. Current market signals show that the RMB can appreciate, but there is no timetable as to when.
By People's Daily Online