China's foreign exchange policy is in good shape and requires no change, Governor Zhou Xiaochuan said on Thursday.

 

Speaking in a session at the World Economic Forum's annual meeting in Davos, Switzerland, Zhou said the country's move from a fixed exchange rate against the US dollar to a managed float linked to a basket of 20 currencies has introduced a great deal of flexibility.

 

But Zhou said China still faced pressure from the international community to let the yuan appreciate further despite the fact that it has already risen by about 2.5 percent against the US dollar since the change.

 

"The floating band now is OK ... but it is not fully utilized," Zhou said.

 

He declined to give details of the currency basket that China uses, but said the US dollar accounts for "much less than 50 percent."

 

Zhou said he expects China's economy to continue to grow strongly this year. He expects gross domestic product growth to be between 8 percent and 9 percent. China's economy grew 9.9 percent in 2005.

 

 

(China Daily January 27, 2006)