China pursues gradual reform of RMB rate
(Xinhua)
Updated: 2005-06-26 10:47

Chinese Premier Wen Jiabao said Sunday China must uphold the principles of independent initiative, controllability and gradual progress in pursuing RMB exchange rate reform.

China's exchange rate reform is a 'slow business', central bank head Zhou Xiaochuan said on May 24, 2005. [AFP]

In the exchange rate reform, the premier said, China should take account of its possible impact on the country's macro-economic stability, economic growth and job market, give consideration to the state of the financial system, the level of financial regulations, resilience of the enterprises and effect on foreign trade and keep an eye on the economic and financial performance of the neighboring countries and regions, and of the world as a whole.

"By 'controllability,' we mean to properly manage the changes in RMB exchange rate at the level of macro-regulations. We must push forward the reform but always stay on top of the challenges, so as to prevent fluctuations in the financial market and economicinstability."

"By 'gradual progress,' we mean to push forward the reform in a step-by-step manner. We must take into consideration both the present needs and the future development and guard against undue haste."

Chinese Premier Wen Jiabao delivers a keynote speech Sunday, June 26, 2005 at the opening ceremony of the Sixth Asia- Europe Finance Ministers' Meeting (ASEM FMM) in Tianjin, North China municipality. ASEM FMM, an important forum under the framework of the Asia- Europe Meeting, is aimed at implementing resolutions and principles reached by Asia-Europe summit meetings on fiscal and financial issues, and improve economic and financial cooperation among Asian and European nations. [AP]

However, the premier said, since this reform involves a wide range of areas and will have a far-reaching impact, it still requires a great deal of preparation to help create an enabling environment for all sides to sustain the possible impacts.

Such a responsible attitude and practice of China will contribute to the stability and development of not only Chinese macro-economy but also the economy of the surrounding countries and the larger world, the premier said.

Stable RMB exchange rate in interests of all

Chinese Premier Wen Jiabao addresses the opening ceremony of the Sixth Asia- Europe Finance Ministers' Meeting  in Tianjin, June 26. European finance officials said it was up to China to decide when and how to make its currency more flexible, backing off from the US approach of pressuring Beijing over the issue. [AFP]

Wen said maintaining the RMB exchange rate basically stable at a reasonable and balanced level also contributes to the world financial stability and expansion of trade.

"This point was well illustrated during the Asian financial crisis in 1997, when the stable RMB helped alleviate the pain on our neighboring countries and regions and contribute to economic and financial stability and development in Asia and the whole world, " he said at the opening ceremony of the Sixth ASEM Finance Ministers' Meeting in the northern China port city of Tianjin.

Policy suitable to national conditions

Chinese Premier Wen Jiabao addresses the opening ceremony of the ASEM FMM in Chinese northern Municipality Tian Jin, on June 26, 2005. Wen said China would pursue a gradual reform of RMB. [Xinhua]

"It is the common understanding in the world that every country is entitled to choose the exchange rate mechanism and policy suitable to its own national conditions," said Wen in a keynote speech at the opening ceremony of the Sixth ASEM Finance Ministers' Meeting in the northern China port city of Tianjin.

Back in the early 1990s, China set its targets and tasks for the reform of RMB exchange rate mechanism, which is to gradually establish a market-based and well-managed floating exchange rate system so as to keep the RMB exchange rate basically stable at a reasonable and balanced level, said the premier.

Over the past decade and more, China has done a lot on the reform of the RMB exchange rate mechanism and made important progress, he added.

Chinese Premier Wen Jiabao Sunday put forward a five-point suggestion to further Asia-Europe financial cooperation at the opening ceremony of the Sixth ASEM Finance Ministers' Meeting (FMM).

Wen firstly suggested Asian and European nations strengthen dialogue and coordination on macro-economic policies, saying it isof great importance for Asian and European countries to regularly exchange economic and policy information through increased dialogue, communication and equal-footed consultation to jointly deal with risks and challenges facing the world economy.

"To promote sustainable and steady development of the world economy, we need to pool our efforts and adopt responsible macro-economic policies to maintain the stability of the major reserve currencies, curb big fluctuations in oil prices and prevent the rise of trade protectionism in all forms," he said.

"The Chinese government proposes to establish an ASEM Contingency Dialogue Mechanism for Emergent Economic and FinancialEvents within the framework of the ASEM FMM for the purpose of safeguarding economic and financial security," he said.

Secondly, Wen urged countries of the two continents to increaseexchanges on development experience.

"We should have in-depth discussions on development paths and strategies and increase exchanges to share experience in regional integration and success stories in macro-economic regulations and restructuring under open conditions," the premier said.

Later this year, China and United Kingdom will co-sponsor a Fiscal Policy and Public Debts Forum within the framework of the ASEM FMM.

"All the finance ministers of Asian and European countries and members of their financial communities are most welcome to take part in this Forum," Wen said.

Thirdly, Wen said he hoped Asian and European nations would deepen substantive cooperation in fiscal and financial sector.

Asian and European countries should actively explore and advance fiscal and financial cooperation between the two continents to develop the Asian regional bond market and support the role of the euro in maintaining international financial stability and promoting development, so as to enhance the international standing of Asia and Europe in the monetary and financial field.

"We should also give full scope to the positive role of the ASEM Trust Fund in assisting the underdeveloped members of ASEM intheir financial reforms," he said.

Fourthly, the Chinese premier suggests Asia and Europe strengthen technical assistance and financial capacity building.

He said, "Given the uneven development between Asian and European countries, we should render greater support to the poor countries in the region through vigorous technical assistance so as to promote the realization of UN Millennium Development Goals."

Lastly, Wen suggests Asian and European nations foster an environment for win-win international economic cooperation.

"We should, through our coordination and cooperation, promote the international community to pay more attention to the interestsof the vast number of developing countries by way of substantiallywriting off their debts, increasing development aid and speeding up technology transfer."

"We should also facilitate the reform of the international financial and trade systems, promote an early conclusion of the WTO Doha round negotiations and call for innovative thinking in international development so as to establish a sound new international economic order," the premier said.

The Sixth ASEM-FMM, themed to "promote closer Asia-Europe economic and financial cooperation," attracted more than 200 participants from 13 Asian countries, 25 European nations and the European Commission, and representatives from international financial institutions such as the World Bank and the International Monetary Fund.

Enhanced cooperation between Asia, Europe

Chinese Premier Wen Jiabao Sunday urged Asian and European countries to strengthen cooperation in all areas in a bid to lift Asia-Europe cooperation to a new high.

"Asia is by far the most dynamic economy in the world while theEU the world's largest developed economy. Their cooperation to mutual benefit has truly broad prospects," Wen said in a keynote speech delivered at the Sixth ASEM Finance Ministers' Meeting (FMM), which opened here Sunday.

"The founding of ASEM is a strategic choice of Asia and Europe to step up exchanges and cooperation under the new international situation," Wen said, adding that since the first ASEM meeting in 1996, Asia and Europe have been keen to conduct political dialogue,economic cooperation and scientific, technological and cultural exchanges, which has helped the growth of the new ASEM comprehensive partnership and contributed significantly to world peace and common development.

The Chinese premier expressed the belief that the enlarged ASEM,whose member countries have two fifths of the world's population and over half of the world's total gross domestic product (GDP), will play an even greater role in world affairs.

More than 200 representatives from the 39 parties of the ASEM gathered in the northern China port city to attend the one-day Sixth ASEM FMM, the first of an enlarged ASEM, which Wen said would be a good opportunity for participants to explore strategiesfor ASEM economic and financial cooperation under the new situation and to discuss the major issues in the world economy.

Two documents -- a Chairman's Statement and a Tianjin Initiative on Closer ASEM Economic and Financial Cooperation, are expected to be adopted at the meeting which focuses on the theme to "promote closer Asia-Europe economic and financial cooperation."

China's development poses no threat

China's development is, by no means, a threat to any other countries, Chinese Premier Wen Jiabaosaid here Sunday at the opening ceremony of the Sixth ASEM FinanceMinisters' Meeting (FMM).

"China's development is conducive to the stability and prosperity of our region and peace and development of the whole world, and will not threaten or exert an adverse impact on any country," Wen told Asian and European financial officials at the meeting.

China has achieved sustained and rapid economic growth, markedly enhanced overall national strength and constantly improved people's life since its adoption of the reform and opening-up policy, he said in a keynote speech.

"China's development largely depends on our own efforts, our own vast domestic market, abandonment labor resources and the implementation of the reform and opening-up policy."

Over the past two years, he said, China has taken effective macro-economic measures to address the prominent problems in the economy and the Chinese economy has been in good shape.

The Chinese government will continue to take measures to further tackle the existing problems, with a view to achieving long-term, steady and fast growth of the Chinese economy.

"We are fully confident, capable and resourceful. We can overcome any difficulty and risk on the road ahead and reach our determined magnificent goal of social-economic development," he said.

The Sixth ASEM-FMM, themed to "promote closer Asia-Europe economic and financial cooperation," attracted more than 200 participants from 13 Asian countries, 25 European nations and the European Commission, and representatives from international financial institutions such as the World Bank and the International Monetary Fund.