The central bank has no timetable for a fully convertible
renminbi, People's Bank of China Governor Zhou Xiaochuan said on
Friday.
Speaking at the Asian Financial Forum in Hong Kong, Zhou
stressed that China would take a step-by-step approach in reforming
its currency regime.
When asked about the timetable, Zhou said: "When conditions are
ripe, it will come out naturally."
The central bank abandoned its currency peg to the US dollar in
July 2005 and linked the renminbi to a basket of currencies. Since
then, the currency's exchange rate against the greenback has risen
nearly 10 percent, from 8.3 yuan to 7.5 yuan.
China's major trading partners such as the United States,
however, have been pushing the country to quicken the pace of
revaluation, saying the yuan was undervalued and had resulted in a
ballooning trade surplus of China.
The country recorded a trade surplus of $161.7 billion with the
US in the first eight months of this year.
Zhou said any decision to revaluate the currency would be made
largely based on the domestic situation instead of tracking US
policy.
The interest rate policy is "very much based on domestic
economic considerations such as the CPI, investment and
consumption," Zhou said.
This week's half-point interest rate cut in the US will not
constrain China's monetary policy, although Zhou admitted that the
rate gap between the two incurred arbitrage and carry trades.
The central bank last week raised benchmark interest rates for
the fifth time this year, lifting them by 27 basis points.
Some market watchers have said that a widening rate gap may
attract more hot money to the mainland, betting on a stronger
yuan.
Banking reform
Reform of the mainland's financial sector will continue
regardless of the stock market's recent ups and downs, Zhou said,
adding that investor education and corporate governance will
continue to be an important task.
The central government has completed the restructuring of major
domestic lenders including China Construction Bank, Bank of China,
Industrial and Commercial Bank of China and Bank of Communications.
"As a result, their quality improved," he said.
The central bank will press ahead with reform of the
Agricultural Bank of China and other State-owned financial
institutions.
(China Daily September 22, 2007)
