• search

China likely to go cautiously on yuan-ADB's Jin

Written by: Staff
Subscribe to Oneindia News

HYDERABAD, India, May 3 (Reuters) China is likely to stick to its prudent approach in currency reforms to help rebalance its economy, despite its rosy growth outlook, a senior official at the Asian Development Bank said on Wednesday.

Jin Jiqun, a vice president of the ADB and a former Chinese vice finance minister, said China's rapid urbanisation would help the economy maintain robust growth of 8 to 9 percent in the next five to 10 years.

''The prudent approach to reforms of the exchange rate regime is good for China and good for the rest of the world,'' Jin told Reuters on the sidelines of the bank's annual meeting.

A more flexible yuan would help reduce the economy's reliance on exports over time, Jin said.

But asked whether he expected the yuan to rise sharply, he said: ''Some people say the yuan is 30-40 percent undervalued (versus the dollar), which I believe is pure speculation.'' The government should step up efforts to avoid big swings in the economy, which grew 10.2 percent in the first quarter on strong exports and investment, he said.

''China should avoid major fluctuations because the boom-to-bust cycle is more damaging than the seemingly lower growth rate,'' Jin said.

China revalued the yuan by 2.1 percent against the dollar in July in a landmark reform that introduced a managed float regime to pave the way for greater currency flexibility.

But the central bank has kept the yuan on a tight leash, despite expectations of faster appreciation of the currency amid pressure from the United States and other countries that say a weak yuan gives Chinese exports an unfair advantage.

''The policy changes are in the interest of China's economy as a whole in the long term but it's not easy as it has to consider the impact on all sectors, especially the banking sector,'' Jin said.

''I don't think Chinese decision-makers will make any policy changes simple because of pressure from the outside.'' REUTERS SBJ ND2005

For Breaking News from Oneindia
Get instant news updates throughout the day.

X
We use cookies to ensure that we give you the best experience on our website. This includes cookies from third party social media websites and ad networks. Such third party cookies may track your use on Oneindia sites for better rendering. Our partners use cookies to ensure we show you advertising that is relevant to you. If you continue without changing your settings, we'll assume that you are happy to receive all cookies on Oneindia website. However, you can change your cookie settings at any time. Learn more