DOUBLE-EDGED SWORD: A pattern cutter in a garment factory in Jiaxing, Zhejiang Province, works on a new design. Experts think the renminbi exchange rate reform will create difficulties for some exporters in the short run, but will ultimately help spur exporters to upgrade their production capabilities (WANG XIAOCHUAN)
Signs of a stable recovery are becoming more noticeable in China, especially after the People's Bank of China, the central bank, decided to proceed with efforts to reform the renminbi (yuan) exchange rate regime and improve the currency's flexibility. Several experts recently shared their views on the reform's principle, content and influence on Chinese exporters and the economy with Xinhua News Agency. Edited excerpts follow:
Li Daokui, professor at Tsinghua University and adviser to the Monetary Policy Committee of the People's Bank of China: China's exchange rate policies are back to normal as the country proceeds with the renminbi exchange rate regime reform—a signal of the end to the country's exchange rate policies designed to cope with the financial crisis.
The renminbi exchange rate remained basically stable through the worst of the crisis, while a number of other major sovereign currencies depreciated against the U.S. dollar. This is the most important contribution China made to the global economic recovery. Major countries around the world praised China for its exchange rate policies during the crisis.
Now—with China's economic recovery gaining ground and picking up along the route of a V-shaped recovery—is the right time for China to further reform the exchange rate regime. Domestically, China has prioritized the transformation of the nation's economic development pattern and economic structure adjustment. Globally, the world economy is standing up. Even with the sovereign debt crisis in Europe, the chances of a second dip are almost non-existent.
Against this backdrop, the timing could not be more perfect for China to get its exchange rate policy back on track and push forward the reform of exchange rate regime.
Ding Zhijie, professor at the University of International Business and Economics: Maintaining comparative stability of the renminbi exchange rate is a short-term counter-crisis measure, although in doing so the Chinese Government has played an important role in the world's fight against the impacts from the crisis. Changes in economic situations at home and abroad have formed external conditions for further reforms of the renminbi exchange rate regime.
Li Daokui: The renminbi (yuan) exchange rate will follow a bi-directional floating pattern—appreciation and depreciation are all possible against major currencies—for more flexibility. If the euro depreciates further against the U.S. dollar or the U.S. dollar appreciates against other currencies, the yuan might depreciate moderately against the U.S. dollar, with reference to a basket of currencies. The yuan will not necessarily appreciate by great margins against the U.S. dollar. Even if the yuan appreciates, past experience tells us the appreciation will be kept within reasonable and acceptable limits to ensure appreciation in a gradual and controllable manner.