China in no rush to reform forex regime

China made clear on Saturday it is in no rush to reform its exchange rate regime, dashing hopes for a breakthrough on currency issues at next week's Group of Seven finance ministers' meeting. Senior officials attending the World Economic Forum in the Swiss ski resort of Davos said reform would come - but that there was no timetable for it.
For over a year now, top industrial nations have been urging China to let its yuan currency strengthen to help balance global growth and resolve the massive US current account deficit.
A flexible exchange rate regime for China, along with dollar weakness triggered by US trade and fiscal deficits, will be hot topics at the G7 meeting, which starts in London on Friday.
China's central bank officials and finance minister will attend. But Huang Ju, China's vice premier in charge of financial and banking issues, told the Forum's annual meeting that before acting on exchange rates, China needs to make further progress on cleaning up its banking system and opening up its capital markets.
"We do not have a specific time frame," Huang said. "To improve the exchange rate mechanism, we have to maintain the exchange rate at a reasonably stable level. Of course we have to take into account the balance of payments."
His comments were underscored by Li Ruogu, deputy govenor of China's central bank.
"We have already decided to gradually move to more flexible exchange rates but there is no timetable. I don't know ... how long it will take," he said. "We will keep the exchange rate at a reasonable equilibrium level, basically stable."
While Asian officials have said they worry that floating the yuan too soon might undermine the still-fragile Chinese banking sector, China has come under immense pressure from the United States and Europe to allow its currency to appreciate soon.US Treasury Under-secretary John Taylor told the Forum that China was taking steps toward currency reform, such as developing futures markets.
But he said that China cannot adequately prevent its economy from overheating or inflation accelerating by relying only on interest-rate policy and other administrative mechanisms. Currency reform must be part of the solution, he said. Business leaders, however, indicated that they saw no immediate end to the dollar's slide.
Bill Gates, the founder of Microsoft Corp and the world's richest man, said he was expecting the dollar to fall further.
"The old dollar, it's going to go down," he said.