SAFE refutes Yuan criticism

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Last updated at: (Beijing Time) Monday, September 29, 2003

SAFE refutes Yuan criticism

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The State Administration of Foreign Exchange (SAFE) last week refuted recent United States criticisms about its exchange rate policy, reiterating its principles of independence and responsibility in handling the issue.

The exchange rate system and policy are part of a country's internal affairs and no other nation has the right to interfere, a SAFE spokesman said.

"On this issue, China has always been independent and highly responsible. The international community has long agreed with this principle.''

The SAFE spokesman reiterated that China will continue to maintain the basic stability of the renminbi's exchange rate, which he said has not only helped promote China's reform and opening-up and stimulated domestic demand, but contributed to the fight against the Asian financial crisis in the late 1990s.

China will adopt stricter standards for applicants of initial public offerings (IPOs) next year to ensure the better quality of its listed companies, the China Securities Regulatory Commission said.

The new standards require domestic companies to finish their shareholding restructuring three years prior to sending in their listing applications, though exceptions are permitted for State-owned enterprises which transfer entirely into shareholding companies and under other situations allowed by the State Council.

Meanwhile, companies planning IPOs cannot have major managerial changes over the three years leading up to the flotation.-

CENTRAL BANK

China's central bank last week injected 19.57 billion yuan (US$2.36 billion) into the market in its additional open market operations to help offset a temporary shortfall caused by a hike in bank reserves.

The People's Bank of China bought back some immature commercial bills on Thursday on the Shanghai-based national interbank market, where it conducts operations with state-owned commercial banks.

The central bank said on August 23 it would raise reserve requirements for banks to seven per cent from six per cent starting on September 21, asking banks to set aside a larger portion of deposits in a bid to drain funds from the system.

CREDIT RATING

Rating action considered

Moody's Investors Service has placed on review for possible upgrade of the A3 rating of long-term foreign currency bonds of the Chinese Government, Moody's said last week.

The rating agency also placed on review the A3 ceiling for foreign currency bonds, the Baa1 ceiling for foreign currency bank deposits and the Prime-2 short-term foreign currency ceilings for notes and deposits. All could potentially be upgraded.

Moody's said the rating action was prompted by the exceptional strengthening of China's external payments position. Several significant factors -- China's dynamic exporting performance, its ability to attract substantial amounts of foreign direct investment and its relatively modest levels of external debt, make it likely that the nation will continue to reduce its vulnerability to external shocks.

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