Jin pledges further exchange rate reform
By Chuan Yu (China Daily)
Updated: 2005-10-15 09:22

China's finance minister pledged on Friday to press ahead with its exchange rate regime reform, while calling upon developed countries to increase their contributions to global issues like poverty reduction.

Responding to questions after meeting with his British counterpart, Jin Renqing said: "We have been reiterating our exchange rate reform target - that we aim to establish a market-based managed floating exchange rate system, and maintain exchange rate stability at an appropriate level."

He added: "We have taken a very important step, and we will continue with the reform step by step."

China announced a reform to its decade-old exchange rate policy of the renminbi, or yuan, on July 21, dropping the peg to the US dollar and basing the currency value on a basket of currencies instead.

The currency was also allowed to rise by 2 per cent against the US dollar, which was welcomed by China's trading partners that have been pushing for a yuan appreciation, although the nation has stressed higher value of the yuan will not solve global trade imbalances.

"We welcome the progress made in China," said Gordon Brown, Britain's Chancellor of the Exchequer, after stressing that all continents should do their bit in maintaining global stability that is being threatened by soaring oil prices and other changes.

The two ministers launched a joint paper entitled Responding to Global Economic Challenges yesterday, setting out the opportunities and challenges presented by rapid economic change, and the appropriate response at a national, regional and global level.

The paper proposed domestic policies that are key to maximize the benefits of globalization, including establishing macroeconomic stability through sound fiscal and monetary frameworks and facilitating the growth of a flexible and entrepreneurial business sector.

It also called for efforts at an international level, in such areas as promoting trade openness rather than protectionism and working to eliminate poverty and achieve the United Nations' Millennium Development Goals, which require developed countries to fulfill their commitments to mobilize aid and debt relief.

"We hope developed countries can reduce agricultural subsidies, we hope they can meet the requirements of the Millennium Development Goals and provide more funding support to developing countries," said Jin.

"And we hope developing countries can formulate policies that better support their own development," he added.

The officials also highlighted achievements in bilateral financial co-operation. Noting Sino-UK strategic co-operation is in its best era in history, Jin expressed confidence in meeting a bilateral trade target of US$40 billion by 2010, as envisioned by Chinese Premier Wen Jiabao.

"Bilateral trade was close to US$20 billion last year, and we will likely have US$25 billion this year," he said. "Reaching US$40 billion in 2015 is absolutely achievable, and the potential might well be more than that."