A top central government economic adviser yesterday said
pursuing free convertibility of the renminbi is key to building
Shanghai into an international financial center.
Xia Bin, head of finance institute of the State Council
Development Research Center, also noted the pace of opening up
China's financial market should be "moderate" to contain potential
risks at a time when the country's financial system is not yet
fully developed.
"China should take gradual and progressive steps to allow market
forces to dictate the foreign exchange rate for the renminbi to
ensure a sustainable development of the economy," said Xia at the
Global Chinese Financial Forum held in Shanghai yesterday.
Echoing Xia, Li Yongsen, an economics professor at Renmin
University of China, said: "The absence of a freely convertible
currency makes it impossible for the establishment of an
international financial center. We must bear in mind that currency
reform is a complicated and a long-term task."
Xia also said the authorities should consider measures to check
the scale of shares held by foreign capital in China's financial
institutions and the speed of foreign capital's flow into China's
property market to ensure the stability of the capital market and
ensure continuous economic growth.
On rising inflation, Xia said the consumer price index is not
the sole barometer for the central bank to determine monetary
policies. "The central bank is expected to keep a close watch on
the movements of asset prices as the focus of any action on the
monetary front will continue to be on dampening liquidity growth in
the capital market."
Xia noted that efforts should also be spent on a closer
cooperation between Shanghai and Hong Kong to optimize resources in
the two cities and complement each other to achieve mutually
beneficial development.
"There is no denial that the growing size of China's economy is
lending support to the development of the financial market," said
Luo Yuding, a professor of securities and futures school with
Shanghai University of Finance and Economy.
Experts at the forum highlighted the increasing importance of
the commodity market in the development of China's financial
market.
"The commodity market is to become China's most important
market. Prices of commodities in Asia and China are expected to go
much higher in the next 25 to 30 years," said Jim Rodgers,
investment guru and co-founder of Quantum Fund.
(China Daily July 27, 2007)
