China Daily quoted foreign economists and think tank researchers have said China foreign exchange regime reform is not only in the interest of its own economy but also can alleviate global trade and economic imbalances.
But they also suggested the developed nations that have blamed China for contributing to the imbalances should not bet too much on the country exchange reform and the large-scale appreciation of the yuan. They should instead seek other ways to address global concerns.
Last weekend, China Central Bank issued a statement announcing it had decided to proceed with reform of the exchange rate regime and to enhance the exchange rate flexibility, ending a fixed peg of CNY 6.83 per dollar adopted in 2008.
The move was welcomed by Mr Thomas A Bernes executive director and vice president of Canada based think tank The Centre for International Governance Innovation. He said that "It's really welcome, because it shows there was serious commitment to move forward. And I think it's an important step by China and it can also help others to make moves jointly."
He added that "It's in China's own domestic interest as well as the interest of the multilateral system, and it works to make the adjustments, despite the huge internal debates by exporters".
China has been criticized, especially by developed countries and overspending nations as a major source of global imbalances. The country purchasing power will become stronger as it allows the yuan to rise. This is expected to enable China to consume and import more, narrowing the surplus with trade partners.
A report by Nomura Securities International said "The basic argument is that greater flexibility will be a step toward global rebalancing, and it will also reduce the risk of trade tensions between the United States and China. As such, it is welcome news."
China move comes a few days before the G20 Summit opens this weekend in Toronto. The meeting is expected to help alleviate potential pressures from many sides. China Ministry of Foreign Affairs said it is inappropriate for China foreign exchange rate to be discussed during the summit.
(Sourced from China Daily)
