Senior financial officials at the Boao Forum for Asia reacted yesterday to reemerging calls from the US for China to revalue its currency, warning against viewing the issue as one that concerns US interests alone and ignoring the more complex realities involved.
Wei Benhua, deputy director of the State Administration of Foreign Exchange (SAFE), said at a panel discussion that, though China would take into account the impact a revaluation would have on its neighbors should it decide to proceed, it sees its domestic development as the most important aspect in deciding foreign exchange policy.
In comments clearly directed at a US Congress proposal to take punitive measures against a perceived undervalued renminbi, he added that China does not "pay attention solely to the trade deficit of certain countries."
Wei said the US trade deficit was fundamentally the result of its own flawed economic policy, and China's trade surplus should be seen from a multilateral perspective, not simply from one of bilateral trade.
"Don't forget China has a deficit with Japan, some ASEAN countries, and a number of European countries. We need to consider the issue in a worldwide context," he said.
Wei said he had discussed the issue with US financial officials recently, telling them: "This trade deficit is your problem. You need to put your own house in order before blaming your neighbor."
Roberto de Ocampo, president of the Asian Institute of Management and the Philippines' former secretary of finance, agreed, saying that a flexible foreign exchange rate system is generally a good thing, but "one does not do it for the wrong reason."
He said many of China's exports were partly processed in other parts of Asia, though the final products were assembled in China.
"Unfortunately, this particular relationship among countries in Asia is not appreciated by those pressuring for a revaluation of the Chinese currency, to the point that even now there are discussions in the US Congress for protectionist measures in the form of legislation involving tariffs and so forth directed at China.
"That is the wrong solution to a misread problem," he said, and China should continue to strengthen its financial sector before making significant moves in its foreign exchange management, "not start from a conclusion about its exchange rate and work from there to the financial sector. It should be the other way around."
Khempheng Pholsena, vice-president of the Asian Development Bank, said she had every confidence in China's ability to make a decision on foreign exchange system reform.
"When and how much is up to the People's Republic of China," she said.
(China Daily April 25, 2005)
