Currency reform should adapt to economic development

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Since China's exchange rate reform in 2005, the yuan has appreciated more than 30 percent against the US dollar. The significant rise stimulated the RMB bond market development. But even if the yuan appreciates more, this won't solve the problems in some developed countries.

The off-shore RMB bond market has taken off since mid last year and is quite sensitive to the exchange rate of the yuan. Investor interest in the Emerging Markets has grown over the past few years because of the record low yields in a number of developed bond markets. Many are rated lower than their Asian counterparts such as China.

China has honored its promise to reform the exchange rate regime of its currency by tying the value of the yuan more closely to market demand. But the government says process will continue in a prudent manner to maintain economic stability both in China and beyond. If the yuan's appreciation makes Chinese exports more expensive, western consumers will simply turn to products from other low-cost countries. This would not resolve the developed countries own problems and would hurt international commercial cooperation.

Zhong Wei, director of Financial Research Center of Beijing Normal University said: "Because of the sustained RMB appreciation, exports, which are one of the key engines in China's economic growth, have been severely depressed. It's not realistic to depend on a more considerable appreciation of the yuan in the future."

Editor:Zhang Rui |Source: CNTV.CN



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