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Mixed views in China about revaluing the yuan

China should speed up efforts to ease its currency peg against the US dollar and let the market determine the exchange rate, said Wu Jinglian (吳敬璉), an economist with the Development and Research Center of the China's State Council.

"China already has the conditions needed," Wu, a former member of the central bank monetary policy committee, said. "I hope we could see some concrete results within this year."

Wu, attending the Chinese People's Political Consultative Conference in Beijing, spoke to reporters outside of the meeting.

Wu, 75, echoed comments from US and European governments urging China to scrap the peg. President George W. Bush has said the link artificially depresses the currency and gives Chinese companies an unfair trade advantage. The Chinese currency, the yuan, has been valued at about 8.3 to the US dollar since 1995, and it is allowed to trade 0.3 percent above or below that rate.

"If the yuan is significantly undervalued, it not only hurts our trading partners, but also makes our imports more expensive," Wu said. "It also encourages our exporting companies to rely on cheap prices instead of enhancing their competitiveness."

Wu was on the 13-person central bank panel for two years through April 2002, the member chosen to represent academia. He was the first economist to highlight irregularities among brokerages in 2000, China News Week reported.

The Chinese government has said it plans to move to a more flexible system, without saying when.

Chinese Finance Minister Jin Renqing (金人慶) rejected claims that the yuan is undervalued and said the government will keep the currency stable as it makes changes to the exchange-rate system.

"The yuan is trading at a level that's in line with our nation's economic and trade conditions," Jin told a press conference during the National People's Congress. A stable yuan benefits the global economy's development, he said.

Central Bank Governor Zhou Xiaochuan (周小川), who is also attending the Congress meeting, said China is considering linking the yuan to a basket of currencies.
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