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China, US reach consensus on currency rate reform

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By: chen cheng
Category: Apparel
: Fashion
Posted: May 25, 2010
Updated: May 25, 2010
Views: 425


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BEIJING - China will chart its own course on currency reform based on its needs, and external pressure will only delay the reform, Assistant Finance Minister Zhu Guangyao said on Tuesday.

"China and the US have reached consensus that the US understands that China will independently decide on the specific steps of its exchange rate reforms, based on its own interests, taking into account world economic conditions and China's own development trends," he said.

Zhu made the remarks after the closing ceremony of the second round of the China-US Strategic and Economic Dialogue in Beijing.

In his closing remarks, US Treasury Secretary Timothy Geithner welcomed a pledge by China's top leaders to pursue currency reform as part of a broader agenda aimed at boosting domestic consumption and helping rebalance global growth.

"This is, of course, China's choice," he said.

Geithner said he was "as confident as I've ever been" that China will see that it is in its own interest to let the yuan resume appreciating - for example, to help curb inflation.

President Hu Jintao said on Monday, during the opening ceremony of the dialogue, that China will continue to "steadily push forward the reform of the foreign exchange rate mechanism, under the principles of independent decision-making, controllability and gradual progress."

The remarks sparked market speculation that the government will let the currency rise in the near future.

"Thanks to the global economic situation, China is facing less global pressure on currency revaluation, and now is the opportune time to widen the band of currency flotation and to make the yuan more flexible against the dollar," said Zhang Ning, economist at the Chinese Academy of Social Sciences.

As part of the outcome of the dialogue, China also "agreed to submit a revised agreement on government procurement by July".

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