PBOC advisor: Further yuan rate reform won't hurt exports

11:21, June 21, 2010      

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Further yuan exchange rate reforms won't have a strong impact on China's export-oriented enterprises, said Li Daokui, an advisor from the People's Bank of China, responding to the concern that a higher yuan rate will hit exporters hard.

The central bank announced on June 19 that it would further reform the yuan exchange rate regime and increase the flexibility of the RMB exchange rate.

Its statement also said a flexible currency exchange rate regime will help curb inflation and asset bubbles and create a more favorable international development environment for China.

In the context of globalization, the promotion of yuan exchange rate reform is advantageous to China's economic development, said Ba Shusong, a researcher with the State Council Development Research Center.

Ba noted that the further reform will create a favorable environment for China's exporters as well as its whole economy and will also help to transform the economic development mode.

"The exchange rate is only one of the factors that affect demand, which is the key factor for enterprises," he said. "A lot of people were pessimistic about China's export-oriented sector when China launched the reform of its exchange rate regime in 2005, but the exporters kept gaining momentum."

The central bank's actions "indicated that China's exchange rate policy has returned to normal," Li commented.

Currencies of many countries depreciated severely during the global financial crisis, while China kept the exchange rate of the yuan basically stable.

"China's exchange rate policy won the recognition of the world's major economies during the crisis," Li said.

Li added that the timing for further reform of yuan exchange rate regime is impeccable.

"China's economy has kept the trend of a V-shaped recovery, and the global economy has also maintained its rebound. Generally speaking, a double-dip recession of the world economy is not very likely," said Li. "There is no doubt that now is the perfect time for further yuan rate reform."

By People's Daily Online


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