Central Bank: Further Reform Of RMB Exchange Rate Formation Mechanism

Yi Gang made the above remarks at a seminar on the eve of the 7 annual meeting of the International Monetary Fund and the world bank.

He pointed out that Wen Jiabao, premier of the State Council of China, stressed in New York last month that a significant appreciation of the renminbi would cause serious unemployment problems in China and cause social unrest.

Yi Gang briefed experts and media on China's economic development, development challenges and exchange rate policies.

He pointed out that during the most severe period of the international financial crisis, the currencies of many countries had depreciated sharply against the US dollar, while the RMB exchange rate remained stable, and played an important role in resisting the international financial crisis. China will maintain the basic stability of the RMB exchange rate at a reasonable and balanced level.

Premier Wen Jiabao, speaking at a meeting with US businesses, finance and academics in New York in September 22nd, said that the common interests between China and the United States far outweigh the differences. There is a trade imbalance between China and the United States. This is what we do not want to see. China does not seek a favorable balance. And from the development of these years, the proportion of surplus in the total economy is decreasing. The main reason for the US deficit is not the exchange rate of RMB, but the structure of investment and trade in China and the United States.

Yi Gang said that in July 2005, the RMB exchange rate formation mechanism was further deepened. At present, the renminbi appreciated by 22% against the US dollar. During this period, China's trade surplus with the United States still increased significantly. Moreover, China's goods trade was surplus, trade in services was in deficit, processing trade was surplus, and general trade was deficit.

Yi Gang said: "in recent years, in order to promote economic restructuring and economic growth mode pformation, China has increased investment in promoting urbanization, increasing infrastructure, strengthening environmental protection and improving social security, demonstrating China's efforts to promote global economic balance."