China will respond positively to the United States in the
Economic Strategic Dialogue between the two sides, which is to be
held later this week, the central bank chief said yesterday in
Beijing.
"(US Treasury Secretary) Hank Paulson raised the issue of having
an economic dialogue. We are prepared to give a very positive and
active response to that," Zhou Xiaochuan, governor of the People's
Bank of China (PBC), said at the Caijing Magazine Annual
Conference.
The dialogue issue was raised in September by Paulson when he
met Vice-Premier Wu Yi during his first visit to China in his
capacity as the treasury secretary.
The dialogue's first session will be held on Thursday and
Friday. Zhou will be among top Chinese economic policy makers at
the talks. The US delegation will include Federal Reserve Chairman
Ben Bernanke, Trade Representative Susan Schwab and other senior
officials.
"This is a very important strategic dialogue and probably it's
good for policy coordination and also for trade imbalances and many
other issues," Zhou said.
He made the remarks during a question-and-answer session after
his speech, which itself was rather academic and was mainly about
the rationale of China's current monetary policy.
Although China has been studying the monetary policies of
countries with mature market economies, the goals of China's
monetary policy are still different from those countries, Zhou
said.
He said at the current stage, China could not pick controlling
inflation as the monetary policy's sole target.
"We have to consider other goals, such as economic growth,
employment and the country's balance of payment," he said
Zhou said he had heard comments about PBC's lack of independence
in formulating monetary policy.
He pointed out that China's monetary policy has been supportive
to the country's overall development and reform agenda.
Responding to a question about China's high savings rate, Zhou
said there was still no clear answer to the root cause. The savings
rate has climbed to 50 percent from 40 percent a decade ago.
The high savings rate means enterprises are able to obtain
investment relatively easily. But it can also contribute to many
unnecessary copycat projects, he said.
On the consumption side, experts have said the high savings rate
means that the country still cannot rely on consumption as an
important driving force for growth as it has been.
Zhou said the tentative explanation for the growing savings rate
was that it was triggered by reforms in such sectors as housing and
social security.
These reforms are absolutely beneficial for both economic growth
and personal income in the long term, Zhou said.
Now that the reforms have been started, they must be implemented
in full, he said.
However, the reforms may have prompted many people to increase
their savings to prepare for uncertainties, Zhou said.
(China Daily December 12, 2006)