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People's Daily Online>>China Business

Yuan's value 'unlikely' to rise much soon

By Ding Qingfen in Beijing and Cecily Liu in London (China Daily)

09:26, March 15, 2012

Cooperation between China and US healthy for both, premier says

Premier Wen Jiabao said on Wednesday that China will intensify its currency regime reform and the foreign exchange rate has possibly reached "equilibrium", a signal that there is little room for the renminbi to appreciate soon.

"In the Hong Kong market, the non-deliverable forwards (a type of futures contract) have started to fluctuate in both directions. And this tells us that the exchange rate of the renminbi has possibly reached equilibrium," Premier Wen Jiabao said at a news conference at the end of the National People's Congress session.

"China will go on intensifying foreign exchange reform, especially to allow relatively wider, two-way fluctuation."

The yuan has gained 30 percent in real terms since 2005. But it dropped by 0.7 percent against the dollar this year after surging by 4.7 percent in 2011, while China's exports have been hurt by the slackened global demand, especially because of the European debt crisis.

In February, China's imports gained by 39.6 percent from a year earlier, and exports grew by 18.4 percent, causing a $31.5 billion trade deficit in February, the biggest since 1990. Experts said this will slow the pace of gains in the Chinese currency in the coming months.

"The premier's remark on equilibrium means China will not allow its currency to rise by much in the short term, or say this year," said Li Wei, an economist at Standard Chartered Shanghai.

"And it also shows the nation is not optimistic about China's economy and the exports dragged down by the European debt crisis," he added.

In the annual Government Work Report last week, Wen cut China's expected economic growth rate this year to 7.5 percent.

"China aims for quality growth in the economy, and we want to solve the problem that China's economy is unbalanced, uncoordinated, and unsustainable," Wen said.


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