China stands firm on exchange rate policy
(xinhuanet.com)
Updated: 2004-10-11 14:13

On the economic front, Wen said China should make use of the results of its measures to combat economic overheating to lay a good foundation for reforms and stable development next year.

Wen made the remarks about China's currency, the yuan, Friday, a day after U.S. President George W. Bush piled pressure on his Chinese counterpart, Hu Jintao, to hammer home the message that the United States wanted China to move faster toward a flexible exchange rate system, the South China Morning Post reported.

"We will take gradual steps toward building a flexible and resilient exchange system... because we have to be responsible to the Chinese people and also take into account the stability of the international financial market," Wen was quoted as saying during a visit to Hanoi.

He said the government had not wavered in its commitment to build a market-based exchange-rate system, but a prerequisite for doing so was financial stability, the newspaper said.

The Chinese yuan is effectively pegged at 8.28 to the U.S. dollar.

The United States has publicly called on China to move more quickly toward a flexible currency regime, but the Chinese Government has made clear it will move at its own pace.

On Friday, Wen defended the Chinese Government's exchange rate reforms, pointing out that the mainland had made notable progress on various fronts, such as lifting restrictions on capital flow and allowing greater participation of foreign institutions in the mainland's financial market.

"We have not stopped reforming the currency system since we began our reforms in 1994," Wen said.

China's currency reform goals were a stable currency and a flexible exchange rate which would reflect market supply and demand, Wen said.

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