Japan urges independent monetary policy for China
BEIJING, Sept 10 (Reuters) A Japanese minister urged China on Sunday to make its central bank more independent, improve the transparency of its policies and promote democracy, drawing a cool response from a senior Chinese banker.
Addressing a meeting of the World Economic Forum, Yasuhisa Shiozaki, senior vice-minister for foreign affairs, said Japan would continue to regard China's economic ascent as a shared opportunity rather than a threat.
But Shiozaki, in forthright remarks, listed a number of areas where he said China needed to make progress for the sake of its economic development.
''We need more independence of monetary policy by the People's Bank of China,'' he said, adding that the yuan had to be allowed to trade more freely.
China's policy makers should rely less on administrative edicts to steer the economy because ''political problems'' meant such guidance from Beijing was not working as well as expected.
Shiozaki did not elaborate, but Zhang Xiaoqiang, vice-minister of the National Development and Reform Commission, the top planning agency, acknowledged that local authorities were not implementing some of the central government's policies.
Shiozaki questioned China's corporate governance, noting that top bank executives are appointed by the state, reducing the influence of minority shareholders.
China also needed greater transparency to shed light, for instance, on banks' non-performing loans, which some analysts contend are higher than officially reported, the Japanese minister said.
Li Ruogu, chairman of the Export-Import Bank of China, said China was improving the transparency of its policy-making and suggested that Japan was hardly a model.
''The Japanese should fully understand that it took time for them to become relatively transparent from a situation where there was little transparency. Even now they are not very transparent,'' Li, a former central bank deputy governor, told reporters at the forum.
TRY HARDER Shiozaki said China must also ensure social stability by tackling what he described as a huge gap between rural and urban incomes.
The solution was to improve income distribution and strengthen the country's social safety net, including pensions, Shiozaki said.
''We should point out and stress the importance of so-called shared, universal values such as democracy, human rights, freedom of speech, rule of law and distribution of wealth. All these values should be enhanced here in China,'' he added.
In response, Zhang, the NDRC vice-minister, said China was strengthening the rule of law and increasing transparency as part of its ''people-centred'' philosophy of development.
''We will make greater efforts,'' he said on the same panel.
Furthermore, the ruling Communist Party had made rural development a focal point of the country's latest five-year plan, Zhang added.
Chen Yuan, governor of the China Development Bank, one of the country's three policy lenders, added: ''We have become more transparent and open and we are gradually adapting to market changes.'' Asked about the yuan, Chen said he expected the current trend to continue.
The yuan has risen 2 percent since it was revalued by 2.1 percent against the dollar in July 2005 and untethered from a dollar peg to float within managed bands.
REUTERS DKS PM1905