China's central bank will gradually ease restrictions on capital
flows in a renewed effort to curb its huge trade surplus, according
to Wu Xiaoling, deputy governor of the People's Bank of China.
"China will ease cross-border capital transactions selectively
and gradually under the precondition of effective risk prevention
and intensified capital flow monitoring," Wu told a forum in
Mumbai, India.
She said the bank would broaden the overseas investment channels
step by step, adding it was actively nurturing a foreign exchange
market to provide more investment instruments for foreign currency
holders.
The government would also take more measures to boost domestic
demand and persuade domestic businesses to import and invest
overseas, she said.
China's trade surplus surged almost tenfold to US$23.76 billion
in February from the same month last year. The surplus jumped 74
percent to US$177.47 billion last year.
Wu said the foreign exchange rate of China's currency, the yuan
or Renminbi, though important, was one of many factors behind the
huge trade surplus, adding the main reason was China's economic
growth.
Many Western trade partners, including the United States, have
been pushing China to allow rapid appreciation of the yuan,
alleging its undervaluation has given China an unreasonable export
price advantage.
The yuan has appreciated more than six percent since China
scrapped the peg of 8.28 yuan to US$1 and allowed it to float
within a daily 0.3 percent band from the official central parity
rate on July 21, 2005.
Wu said on Sunday that the government would continue to improve
the exchange rate system and allow more flexibility, but imbalances
in world trade should not be blamed on the yuan exchange rate.
She also said the government would reform the export rebate
system and customs policies to address the trade surplus, while
maintaining a reasonable level for the exchange rate.
(Xinhua News Agency April 5, 2007)