The International Monetary Fund (IMF) should shift its exchange rate focus from the current yardstick to whether a country's currency regime fits with its medium-term economic situation, a Chinese vice-minister said.
"The IMF's exchange-rate monitoring should focus on whether a member country's exchange-rate regime is consistent with its medium-term macroeconomic policies, rather than on the level of the exchange rate," Vice-Minister of Finance Li Yong said at the annual meeting of the IMF and World Bank on Sunday in Washington.
The issue of yuan revaluation has again been cast into the spotlight in recent days by Western countries during G7 meetings of finance ministers and the IMF-World Bank meetings.
But the government said too swift a currency revaluation would pose a danger to China's economic stability.
"We hope the IMF can fully recognize the diversity of its members' situations and the limited role the exchange rates play in macroeconomic management," Wu Xiaoling, deputy governor of the People's Bank of China, said in a statement to the IMF meeting.
The IMF's bilateral monitoring of members' policies began in June and is seen as a renewed effort by the Western world to press for faster appreciation of the yuan.
"It is regrettable that the IMF adopted the decision in June without a consensus from its members," Li said. "We note that in recent months it (bilateral monitoring) has given rise to controversy due to unclear core concepts."
China urges the IMF to "enhance surveillance over countries issuing major reserve currencies, so as to play an effective role in promoting financial stability and economic prosperity", Li said.
Analysts have pointed to the US policy to keep the dollar cheap and cut its deficit as a source of global economic instability.
China, trying to rebalance its economy by encouraging imports and cutting exports, has opted to reform its exchange rate policy in a gradual and controlled manner. Its stance is shared by Malaysia, which ended its currency's peg to the US dollar on July 21, 2005 - the same day China de-pegged the yuan from the dollar.
(China Daily October 24, 2007)
