No immediate need to revalue yuan: top banker

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Last updated at: (Beijing Time) Tuesday, January 13, 2004

No immediate need to revalue yuan: top banker

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China does not see an immediate need to revalue its currency as the renminbi is now under less pressure to appreciate, given the changing economic situation and a pickup in the US economy, said the governor of the country's central bank.

"As the trade balance changes, the economic situation changes, and the US economy picks up very quickly, it seems things are changing," said Zhou Xiaochuan, governor of the People's Bank of China, or the central bank.

"The upward pressure on the renminbi is much weaker," Zhou said at a bi-monthly meeting of central bank governors at the Bank for International Settlements on Sunday.

His remarks echoed other Chinese officials, who have said that the country's narrowing trade surplus with the rest of the world could help ease the pressure on the local currency to rise.

China reported a trade surplus of US$53.15 billion with the United States in the first 11 months of last year, a year-on-year rise of 37.3 percent. But it was a lower growth compared with a gain of 47.8 percent in the first 11 months of 2002.

Meanwhile, the US economy itself is picking up energy, an economist said.

The growth in US gross domestic product is predicted to reach 4 percent in 2004, compared with 2.5 percent in 2002, according to Yuwa Hedrick-Wong, an economist of MasterCard International Asia-Pacific Region.

China has come under strong pressure from the United States to revalue the renminbi as American manufacturers allege that an "undervalued" renminbi saps their jobs and profits and contributes to a high US trade deficit with China.

But industry officials said that China is not the sole country responsible for the US trade deficit.

"It is the US politicians who allege China causes the US' huge trade deficit and high unemployment rate," said Wong. "In fact, the share of the European Union countries, Canada and Mexico to the US trade deficit is growing rapidly in recent years compared to Asia's declining share," said Wong.

In 2002, EU, Canada and Mexico accounted for 40 percent of the US trade deficit, up from 5 percent in 1992. However, Asia's share of the US trade deficit shrank to 50 percent in 2002 from 80 percent in 1992.

In a separate move, Goldman Sachs Group Inc said in a report that it predicted a move toward a more flexible foreign exchange regime in China.

Source: Shanghai Daily

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