Related Event: RMB to Go Up?
The time has come for China to move toward a flexible exchange rate, US Treasury Secretary John Snow said here as he prepared to meet counterparts from the Group of Seven industrialized countries.
"The Chinese have clearly stated that they will move to a market-based, flexible exchange rate," Snow told Japanese Finance Minister Sadakazu Tanigaki, according to a statement issued by his office.
Snow noted that Chinese authorities "have taken steps over the last two years to prepare for a flexible exchange rate and that China is ready now to adopt a more flexible exchange rate and now its time to move."
While not a member of the Group of Seven, China was nonetheless invited to attend G7 finance meetings in September and February, mainly to hear complaints from the group about its reluctance to allow the dollar-pegged yuan to float.
US and European officials maintain that the yuan is undervalued, thereby giving Chinese exports an unfair advantage while making imported goods more expensive and less attractive.
Chinese officials will not be attending this week end's meeting of G7 finance ministers and central bankers, which was to open with a dinner Friday ahead of formal discussions on Saturday.
Chinese chief trade negotiator, Long Yongtu, earlier this month said China was unlikely to undertake broad-ranging reforms of its foreign exchange regime in the near future.
Beijing will only change its foreign exchange regime once its banking system, secondary financial sector and regulatory muscle are deemed strong enough to cope, Long told a seminar in Beijing.
"It's very unlikely China is going to change its foreign exchange regime in the foreseeable future," said Long, who headed the team negotiating the conditions for China's entry into the World Trade Organization.