On April 18, the People’s Bank of China,
the country’s central bank, issued a report saying the higher US
dollar interest rate would help lure idle funds to the US,
resulting in a strong US dollar that would ease pressure to
revaluate the renminbi, China’s currency.
During the first
quarter of this year, the Federal Reserve twice raised the US
dollar’s interest rate by 0.25 percent, resulting in the present
2.75 percent interest rate and 3.75 percent discount rate.
The Analysis of Foreign
Exchange Bank-to-bank Markets in the First Quarter of 2005
said the domestic economy has maintained stable development,
and export growth is still faster than imports. Growth of foreign
direct investment is slowing down and the management of foreign
exchange has been further improved. The exchange rate of renminbi
and US dollar has remained
stable.????
The central bank
reaffirmed that the government has kept a clear and consistent
stand on reform of the renminbi’s exchange mechanism.
Since the beginning of
this year, it has said the country is on track for exchange rate
reform in response to demand from the world's richest nations for a
more flexible regime, but it will be carried out in a measured way
to guarantee stability of the renminbi based on keeping the rate at
a fair and equitable level.
In order to facilitate
the balance of capital payments and maintain a stable exchange
rate, several measures have been carried out by the State
Administration of Foreign Exchange.
These measures include
enhancing and improving the management of short term foreign loans,
adjusting quotas on forex accounts, regulating transactions on
imports and strengthening supervision of foreign payments in
individual property transfer.
The bank said these
measures facilitated trade and investment activities and enhanced
short-term capital inflow as well as foreign exchange transaction
management.
According to the
report, the growth in imports began to slow down last year. During
the first two months of 2005, growth dropped by a large amount,
while at same time, exports increased rapidly.
The report concluded
that import growth decline shows domestic production is slowing
down and also indicates that the whole economy is cooling
down.????
Foreign capital inflow
has tended to slow down, while contractual foreign capital and the
number of newly founded foreign invested enterprises also fell in
February year-on-year. The report said this indicates that the
efforts of central government have begun to take effect.
(China.org.cn by Wang
Zhiyong, May 1, 2005)
