China will maintain the stability of its yuan currency, also known as the renminbi (RMB), after the country joins the World Trade Organisation (WTO), central bank governor Dai Xianglong was quoted on Wednesday as saying.
"We will continue to expand the financial sector opening, maintain a sound balance of payments and maintain the renminbi's stability," Dai was quoted by the official Economic Information Daily as saying.
``After the WTO entry, there will be bigger changes in the balance of payments and the exchange rate will have certain flexibility ... but we will continue to implement and improve the existing exchange rate system,'' he said.
China is expected to join the world trade body by early next year, at the latest.
China practices a "managed float" for the yuan, but from mid-1997 to April 2000, it contained the yuan between 8.2770 and 8.2800 to the dollar to fend off speculation of a devaluation.
It has relaxed its grip over the past 14 months and allowed the yuan to end outside the long-standing range 76 times, although only twice outside the weak end.
The yuan is convertible only on the current account, therefore China's trade surplus -- US$8.14 billion in the first half of this year -- has largely supported the yuan so far this year.
Chinese officials say a more flexible foreign exchange regime will be needed to cope with expected external shocks after China becomes a WTO member. But they have given no timetable or specifics on the wider trade band.
Dai said the central bank would strive to maintain annual money supply growth of 14-15 percent between 2001 and 2005 to help stimulate the economy, which was expected to grow 7-8 percent annually.
(People's Daily 07/26/2001)
