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China's central bank sticks to `no timetable' for yuan

China's central bank reiterated it had no timetable for full convertibility of the yuan, state press reported yesterday, a day after the US Treasury stopped just short of naming Beijing a currency manipulator.

The China Securities Journal yesterday cited the central bank as saying that recent reforms of China's foreign-exchange regime were crucial towards the yuan's full convertibility.

However, the timing of such a move would depend on the status of China's ongoing economic development and the balance of payments position, the People's Bank of China (PBOC) said.

The comments appeared directed at the US Treasury report even though an official with the PBOC had no further comment yesterday.

"We have no comment at the present time," said a PBOC official.

US law mandates that the Treasury bi-annually assess the exchange rates of major trading partners so as to gauge whether they are unfair or not.

China was able to avoid being labeled a manipulator because of its "initial step" toward a floating currency system, Treasury Secretary John Snow said.

But Snow warned China that the US expects further reform of China's foreign exchange regime "as quickly as possible."

However Tim Condon, chief Asia economist at ING in Singapore, said both China and the US had taken steps back from some firm economic positions earlier this year.

"China's compromise on a textile dispute with the US, which extended quotas, was really quid pro quo for the US dropping its vociferous calls for the Chinese to revalue the currency," Condon said.

The PBOC went on to say in the China Securities Journal report that expectations for yuan appreciation remained steady given the possibility of hot money or fund inflows betting on an appreciation move.

To prevent such inflows, the central bank said that it would strengthen supervision over foreign currency, especially trade credits, the real-estate sector and offshore accounts. It did not elaborate.
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