NEW YORK, Sept. 23 -- Visiting Chinese Premier Wen Jiabao said here Wednesday there was no basis for the drastic appreciation of the yuan, the Chinese currency.
' E1 g" k5 ]) R' r During a speech at a welcome banquet by U.S.-China friendship organizations, Wen said the issue of the yuan exchange rate was an economic one and must not be politicized.
) N, k) ~2 D# d Some have linked the yuan exchange rate with China's favorable balance of international trade, saying China keeps the level of the Chinese yuan low to win competitive advantages.* v# K" J" j9 U7 t1 [( L7 c
However, Wen said, there was no certain connection between the exchange rate and a favorable balance of trade.# S: L4 s* o% w j) ~
For example, the United States had maintained a trade surplus for more than 90 years, from the 1870s to the 1970s. But this had become a trade deficit since then and the imbalance had grown bigger in the following years, which was obviously not caused by exchange rate fluctuations, Wen said.
& }4 u, _3 s8 X+ w China had maintained a favorable balance against the United States and the European Union, but had a trade deficit with Japan and South Korea, which indicated the trade imbalance between the two countries could not be explained by the level of the yuan exchange rate, Wen said.
' j2 d) U8 Z {5 d2 S$ s* m He said China had always been highly responsible on the issue of the yuan exchange rate and the issue should be considered with a historical view.0 ?( E- H* F% c
According to statistics based on the exchange rate index of the Bank for International Settlements, the yuan had appreciated by a massive 55.2 percent since January 1994 as of July this year.; r0 s8 ]' b; v) V
Meanwhile, major currencies of the world had depreciated, with the U.S. dollar dropping 2.5 percent, the euro 3.8 percent and the Japanese yen 19.5 percent.1 I% a' c# J6 o0 d( m$ n
Following the latest global financial crisis, a lot of countries' currencies witnessed drastic depreciation.
! m% t/ }* l3 z( A8 b& S During the same period, the yuan had remained basically stable, which contributed greatly to stabilizing the international financial situation and promoting a world economic recovery, Wen said./ {( H4 h2 C) [
The yuan had seen increased flexibility since June 19, when China launched further reforms of the yuan exchange rate mechanism, he said.
, S* G0 |0 O. l2 q Wen said China had made active efforts while still facing great difficulties and there was no basis for drastic appreciation.
! M B* i+ [% X) h/ t# f Reforms on the exchange rate, which was in accordance with China's long-term and fundamental interests, would be continued, he said.
5 U3 L' e" C2 s) u2 J" w' v7 i At the same time, China would also launch structural reforms in an active and effective way to expand domestic demand, particularly civilian consumption, and to promote a sustainable balance of payments, Wen said. |