China to improve RMB exchange rate system
(Xinhua)
Updated: 2004-09-29 09:38

Chinese Premier Wen Jiabao said in Beijing Tuesday that China will adopt measures from a number of aspects to improve exchange rate mechanism of Renminbi (RMB), the Chinese currency, in a steady and appropriate manner.

Wen made the remarks during his meeting with Charles O. Prince, chief executive officer of the Citigroup and former US Secretary of Treasury Robert Robin in the Great Hall of the People in Beijing.

"We will further advance the reform and forge a mechanism which is more adapted to the changes in market supply and demand with still better flexibility," Wen said, acknowledging this reform represents a systematic project involving a host of aspects.

In this course, Wen added, numerous factors should be taken into account, including China's macro economic performance, social development, international income and expenditure; the progress of the reform on banking sector and progress of reforms in related spheres; and the economic and financial situation of neighboring countries and regions and of the world economy and finances.

Improving RMB exchange rate mechanism, and maintaining the basic stability of the RMB exchange rate on a reasonable and balanced level are the direction and goal of the reform on RMB exchange rate system, the Chinese premier said.

In recent years, China has done a lot of related work in improving the RMB exchange rate mechanism, Wen noted, citing the accelerated pace in the reform of State-owned commercial banks; convertibility under the RMB current accounts; steady relaxed restriction on capital accounts.

Those achievements also involves a more and steady opening of the capital market; an increase in the number of institutes from overseas in Chinese securities and stock market and foreign-funded enterprises; the easing of restrictions on financial market access and other related businesses, a rapid increase in the number of products and the scope of the financial market, he added.

China has been following a managed, floating exchange rate system based on the market supply and demand, Wen acknowledged.

RMB has been in a process of appreciating or devaluating against major international currencies ever since 1994, when China started the reform of RMB exchange rates, he recalled. And the floating range was relatively greater in the four years preceding 1997.

Since 1998, to cope with the Asian financial crisis, The Chinese government, in a responsible manner, kept the commitment not to devaluate RMB and narrowed the floating range of the RMB exchange rate, thus contributing to the stability and development of finance and economy of Asia and the world at large, Wen said.

"During my visit to the United States last year," Wen said, "President George W. Bush and I reached five consensuses on Sino-US economic and trade issues with the core of development, equality and mutual benefit."

At present, the overall momentum in the development of Sino-US ties was good and bilateral trade and economic cooperation kept moving forward, Wen said, voicing the hope that the two sides will follow the above-mentioned guidelines to maintain the sound and stable growth of trade and economic relations.

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