China central banker says to keep yuan stable

14 Nov, 2004

China will maintain the nation's currency at a stable level and the country's monetary policy has already returned to a stable level, central bank chief Zhou Xiaochuan was cited on Saturday by state media as saying. The yuan, also known as the renminbi, is pegged at about 8.28 to the dollar. China has come under heavy pressure from countries such as the United States to allow it rise in value. Some US manufacturers say the Chinese currency is artificially cheap and that this saps jobs and exports.
"China's renminbi exchange rate policy is to maintain its basic stability at a rational and balanced level, and constantly perfect the exchange rate system," the Financial News quoted Zhou as telling Luxembourg Prime Minister Jean-Claude Juncker in Beijing.
The comments backed up a report in the Washington Post's Saturday edition, where China's vice central banker Li Ruogu was cited saying controls on the yuan would not be loosened for a couple of years yet.
Zhou added that China's economy would not experience a hard landing, and that monetary policy had got back to a normal level.
China has been tightening credit to rein in an economy in danger of overheating.
Beijing raised interest rates for the first time in nine years last month in its latest step to cool a racing economy.
Consumer prices climbed 4.3 percent in the year through October, pulling back sharply to the slowest pace in six months, which economists said would reduce pressure to raise interest rates again soon.
The most important economic reform China had to face was the reform of its banking sector, Zhou said.

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