Money

China dismisses calls for yuan appreciation

(Xinhua)
Updated: 2010-10-15 09:53

BEIJING - China Thursday reaffirmed its steadfast determination to advance the reforms of the formation mechanism of the renminbi, or the yuan, exchange rate but dismissed calls for the currency's appreciation.

"We are all on the same boat in the age of globalization. It is self-evident renminbi's appreciation is not a cure for the US trade deficit. And nor would it help solve the imbalances in the global economy," Chinese Foreign Ministry spokesman Ma Zhaoxu told a regular news briefing.

China contributed 50 percent to global economic growth in 2009.

"If the yuan is pressed to appreciate and undermine the Chinese economy, would it be a blessing or a curse for the world?" Ma asked rhetorically.

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The reform of the formation mechanism of the yuan exchange rate aims to create a managed floating exchange-rate regime based on market supply and demand and adjusted to a basket of foreign currencies, to gradually allow more flexibility in the yuan exchange rate while maintaining its basic stability on a reasonable and balanced level.

"This is in the interests of both China and the world," he said.

The yuan has appreciated by an accumulated 55 percent in terms of real effective exchange-rates since China initiated reform of the yuan exchange rate mechanism in 1994. Some major currencies depreciated in the same period.

China deepened the reform of the yuan exchange rate mechanism in July 2005. The yuan has appreciated 22 percent against the US dollar since then.

The People's Bank of China (PBOC), the central bank, announced on June 19 this year that it had decided to proceed further with the reform of the renminbi exchange rate regime to increase exchange rate flexibility.