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China would stick to its program of gradually reforming the exchange rate system and making the yuan fully convertible, central bank Governor Dai Xianglong was quoted Monday as saying.
"China will continue to open up to the outside, but we need to advance step by step in three major issues concerning the exchange rate system, capital-account opening and the renminbi's convertibility," the Financial News quoted Dai as saying.
"We cannot make hasty moves," he was quoted as saying during the annual summit of the G-20 finance ministers and central bank chiefs in New Delhi.
Analysts say China is not yet ready to relax its rigid foreign exchange regime, despite a landmark stock market reform next month that could trigger an influx of overseas funds.
The imminent launch of a long-awaited scheme that allows qualified foreign institutional investors, or QFII, to buy yuan-denominated A shares has prompted overseas foreign exchange markets to price in a more flexible and stronger yuan.
The central bank, which has stood by a pledge to keep the yuan stable since the 1997/98 Asian economic crisis, now confines the yuan, also known as the renminbi, to a thin range of 8.2760 to 8.2800 to the dollar.
Officials have said China plans to widen the yuan's trading band to cope with changes in its balance of payments following the country's World Trade Organization last December, but they have given no specifics and timetable.
China still keeps a tight grip on capital-account transactions, although the yuan is convertible on the current account. Some analysts say the full convertibility of the yuan is at least five years away.
(Shenzhen Daily November 26, 2002)
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