said yesterday that there is no real economic reason for China's
currency to appreciate although the country's foreign exchange
reserves have been swelling.
"On the economic level, the renminbi is not under pressure to
appreciate," Wu Xiaoling told the China Business Summit. The
three-day meeting, an annual event co-organized by the Davos-based
World Economic Forum and China Enterprise
Confederation, opened yesterday.
A
currency strengthens when the country's economy become
substantially stronger, Wu said. But she did not see major changes
in the strength of the Chinese economy relative to the world
economy in the near future, she said.
Since 1997, when the Asian financial crisis started, it has been
routine in the public appearances of senior officials of the
central bank to say that the value of the yuan is to remain
stable.
But this time, Wu Xiaoling was not dealing with concerns about the
yuan being devalued.
China's rapid economic growth and strong position internationally
have made any concern about the yuan depreciating unnecessary.
However, the country's hefty forex reserves, growing by a
year-on-year 29 percent to US$228 billion by the end of March, have
triggered speculation that the yuan may appreciate in value.
"The accruing of forex reserves is mainly caused by the regulators'
control of demand," Wu said.
China's exporters are required to sell their hard currency income
to the banks.
But importers need to show buying documents to buy foreign
exchange. Demand for foreign currencies for other purposes such as
traveling are only partly met.
Conversion of yuan to hard currencies for investment must first be
approved by relevant authorities.
Wu
said that the forex reserves would not be so huge if restrictions
were less strict.
But she did not say if the restrictions would be relaxed. She just
repeated the official line of the central bank that they would
"improve the renminbi's exchange rate formation mechanism under the
precondition of the renminbi's stability."
(China
Daily April 19, 2002)