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RMB Revaluation Benefits China
2005-8-9 11:04:03      Xinhua
The reform of the Renminbi exchange rate regime serves China's fundamental interests, and the yuan's appreciation by an appropriate margin benefits the national economy, enterprises and people's lives in general.

The People's Bank of China, the country's central bank, made the remark in a report released Thursday on the monetary policy of the second quarter this year.

China's gross domestic product (GDP) and the per capita wealth in terms of US dollars went up correspondingly after the yuan's appreciation, the central bank said in its report.

The appreciation of the RMB helps to expand imports and reduce exports, which may contain the too-fast growth of China's trade surplus and foreign exchange reserves, and help to fulfill the basic balance of exports and imports as well as the balance of international payments gradually, it said.

This will lead to more efficient usage of resources, alleviate the pressure on the Renminbi, make monetary policy more independent, and financial control more active and effective, as well as maintain a balanced overall economy, it said.

In the long run, the reform of the RMB exchange rate regime will be conducive to implementation of the strategy of sustainable development with a focus on domestic demand expansion, the demand and industrial structure optimization, the economic growth mode change and optimization of resource allocation, it said.

The yuan's appreciation will impose a different impact on different kinds of enterprises, it said. Against the international backdrop of the price hike of crude oil and raw materials, the yuan's appreciation will reduce import costs for enterprises, it said.

For those export enterprises, the yuan's appreciation will bring pressure to them, forcing them to speed up restructuring and technology innovation, it said.

The yuan's appreciation will impose a relatively positive impact upon people's lives, since this will lower the prices of imported goods in the market and lead to cheaper overseas tours for the Chinese people, it said.

Although the reform of the RMB exchange rate mechanism serves the fundamental interest of the country, it will bring pressures to some industries and enterprises with weak competitiveness in the short run, it said.

Enterprises need to accelerate restructure pace, consolidate self-innovation capability, lift up competitiveness and make full use of various foreign exchange tools to avoid risks that forex rate fluctuations may bring, the central bank said.


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Related Stories:
v Central Bank Wants Stable Currency 08-05
v RMB Revaluation To Lift Property Prices 08-05
v HK Monetary Authority Praises RMB Reform 08-05
v Yuan Exchange Rate to Adjust at Proper Time 08-05

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