U.S. News

China Central Bank Official Plays Down Yuan: Surplus Link


China is committed to reforming its currency exchange rate system, although the level of the yuan is not responsible for its large trade surplus, a deputy governor of the central bank of China said on Wednesday.

The surplus has become a bone of contention with the United States, where critics say Beijing is keeping the yuan unfairly undervalued to help the country's exporters. The two nations are holding two days of talks to discuss the issue.

"Though the exchange rate policy as a price leverage, to some extent, could promote (the) trade balance, it can only serve as an auxiliary policy tool," People's Bank of China Deputy Governor Su Ning told a conference.

"It is not reasonable to set a linkage between (the) trade problem and (the) exchange rate," he added, according to the text of his speech in the Estonian capital of Tallinn.

"The Chinese government is committed to push forward the exchange rate mechanism reform on a self-initiated, controllable and gradual approach," he added.

Su said the trade surplus had risen along with China's rapid economic growth, though he said his country did not "pursue the present trade surplus."

"What we expect is a balanced international payment," he added.

China was pursuing further changes to its capital markets, paying more attention to the quality of companies being listed and being strict on information disclosure. "At the same time, we are going to speed up the development of our bond market," he added.

In the U.S.-China talks, Treasury Secretary Henry Paulson has set the expansion of foreign ownership in China's financial services sector as a key goal.

Su said China was already taking steps along this road, noting that 278 foreign banks had begun operations in his country. "The opening up policy is a fundamental policy for China. We are going to push forward the financial reform and deepen the opening up continuously and steadily," he added.