Economist underscores China's fundamental economic policy
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"It is China's fundamental economic policy, instead of a gesture, to have a more flexible renminbi(RMB) exchange rate," said Yu Yongding, a renowned Chinese economist and former China's central bank adviser.
As an academician with the Chinese Academy of Social Sciences (CASS), Dr. Yu told Xinhua in an interview Tuesday that the RMB's appreciation would be a trend, but ruled out a one-off revaluation.
RMB exchange rate reform is China's long-term strategy
"It's a temporary policy for the RMB to be re-pegged to the U.S. dollar during the global economic crisis, while the RMB exchange rate reforms characterized by the rate depending on demand and supply of the exchange market are China's long-term policy," Yu said.
A more flexible currency regime is China's long-term strategy and not a short-term policy or a contingent reaction to some pressures, Yu said.
He rebutted some reports interpreting China's statement as a reluctant lip service under the pressure of some Western appeal ahead of the G20 summit scheduled for later this week.
Given the current economic situation inside and outside China, it's very likely that the RMB would be revaluated against the dollar, Yu said, noting as China is taking a basket of foreign currencies as reference, the RMB's devaluation against the dollar could sometimes take place as well.
"There is a two-way fluctuation" regarding the RMB's appreciation, said the former member of the monetary policy committee of the People's Bank of China, or China's central bank.
Though the potential is for sure, Yu warned against expectancy or speculation bidding on a remarkable jump of the RMB value.
"This change is in the long-term interests of China, because China is now implementing tremendous adjustment, but I'm not expecting there will be a very big jump of the Renminbi exchange rate," he said at an earlier conference on China-Europe relations in Paris.
China, Europe can cooperate in currency system reform
Speaking of the 2010 capital conference of the Boao Forum for Asia, which is expected to take place in Paris in October, Yu said European countries, especially France and Germany, have many common stances with China in setting up a new international monetary regime.
"In establishing a fair and stable international monetary system, and restraining the impact of the U.S. dollar, which is the main international reserve currency, on the global economy, France and China share many common views," Yu said.
As a national currency, the dollar's fluctuation is closely related to U.S. domestic policies, therefore there is a risk of the dollar's contagious effect on foreign economies, Yu said, adding the International Monetary Fund's incumbent Managing Director Dominique Strass-Kahn and its former Managing Director Michel Camdessus both agreed to the view.
"We can consider the international monetary reforms including, for example, the regional currency swap cooperation. There are ways to restrain the dollar's influence over the international economy and France and China can share a lot on it," Yu noted.
European debt crisis has limited impact on China
According to his recent tour around Europe, Yu concluded the European debt crisis is not so serious as some Western media have depicted and its impact on China was limited.
"The European sovereign debt crisis is not as serious as we have imagined, neither that serious as some Western media have described," Yu said. "But it's hard for us to judge how the crisis would develop in the future."
Yu said he had confidence in the European economy and observed an increasingly stabilized European economy.
"There won't be defaults in European countries, because of the support of Germany and France, and the newly-established institutes and mechanisms, which can prevent new crises by raising preventive fund," Yu added.
While admitting the negative impact of the European crisis on China, Yu said the effect was very limited and controllable and China was not pessimistic about the European economy.
"It's worth noting that China is very supportive of the integration of Europe and the euro, and China is willing to contribute to their stability as well," Yu added.
"If there are actual needs and a proper scheme, which allows us to implement the support and guarantees the security of our assets at the same time, China will certainly make every effort to support Europe, in a bid to maintain the stability of the region and its currency," Yu said.
Graduated as a Doctor of Philosophy in economics from the University of Oxford in 1994, Yu used to be director-general of the Institute of World Economics and Politics (IWEP) under the CASS.
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