FACTBOX-What policymakers have said lately on the yuan

BEIJING, April 16 (BestGrowthStock) – Following is a selection of
recent quotes from policymakers, academics and business
executives on what to do with the yuan, also known as the
renminbi.

PRESIDENT HU JINTAO:

“China will firmly stick to a path of reforming the yuan’s
exchange rate formation mechanism. In making reforms, we will
give careful consideration to global economic developments and
changes, as well as to China’s economic condition.”

(Quoted by Xinhua news agency in its account of Hu’s
meeting with President Barack Obama in Washington on April 12)

VICE FOREIGN MINISTER CUI TIANKAI:

Reiterating Hu’s assertion that the yuan’s exchange rate
was an “internal affair”, he said: “On this issue it is not
justified for outsiders to exert pressure and we will not take
action by bowing to this pressure.”

(Briefing reporters on April 13 during Hu’s Washington
visit)

PREMIER WEN JIABAO:

“We oppose mutual accusations between countries, and even
using coercion to force a country to raise its exchange rate,
because that’s of no help to reforming the yuan exchange rate.

“We don’t believe that the yuan is undervalued.”

(Speaking at a news conference on March 14)

ZHOU XIAOCHUAN, GOVERNOR OF THE PEOPLE’S BANK OF CHINA:

He said pegging the yuan since mid-2008 was a “special
policy”, one of a range of emergency measures taken to cushion
the economy during the global financial crisis.

“Practice has shown that these policies have been positive,
contributing to the recovery of both our country’s economy and
the global economy.

“The problem of how to exit from these policies arises
sooner or later. If we are to exit from these irregular
policies and return to ordinary economic policies, we must be
extremely prudent about our choice of timing. This also
includes the renminbi exchange rate policy.”

(Speaking at a news conference on March 6)

COMMERCE MINISTER CHEN DEMING:

“Renminbi appreciation cannot redress the trade imbalance.
It has been proved both in theory and practice that the
appreciation of a nation’s currency provides little help for
improving balance of payments.”

(In an English-language statement posted on the ministry’s
website, www.mofcom.gov.cn, on March 30)

– – – – –

“The movement and degree of stability in the yuan in times
of crisis ought to be different from when there is no crisis.
The direction of yuan reform will be gradual and controlled.”

(Speaking to Reuters on March 8)

LI DAOKUI, A MEMBER OF THE PBOC’S MONETARY POLICY COMMITTEE
AND AN ECONOMIST AT TSINGHUA UNIVERSITY:

“The adjustment should be carried out at a time that is
appropriate. We need to find the right time, but a one-off
adjustment won’t benefit either China or the United States.

“It will hinge on President Hu’s visit to the United
States. If the talks are successful, we could make an
adjustment based on China’s own conditions.”

(Interviewed by Reuters on April 2)

XIA BIN, AN ECONOMIST WITH THE DEVELOPMENT RESEARCH CENTER,
A GOVERNMENT THINK-TANK, AND A MEMBER OF THE PBOC’S MONETARY
POLICY COMMITTEE:

“If China’s economy (Read more about the fastest growing economy.) cools off due to a large one-off
appreciation, it will not benefit the world economy or U.S.
consumers because costs will rise.

“The core interest of the U.S. government at the present is
not the issue of yuan appreciation. They all understand that a
moderate rise in the yuan’s exchange rate will not resolve the
fundamental problems of the U.S. economy, nor high U.S.
unemployment.

“In the long term, the yuan’s exchange rate should be more
flexible.”

(Speaking at a conference in Shanghai on April 8)

– – – – –

“China should resume the pre-crisis managed floating
exchange rate as quickly as possible.”

(Speaking to Reuters on March 30)

ZHANG WEI, VICE-CHAIRMAN OF THE CHINA COUNCIL FOR THE
PROMOTION OF INTERNATIONAL TRADE:

“If the yuan rises, these (labour-intensive export)
companies will face the immediate risk of going bust as their
profit margin is already very narrow. For these companies, the
consequences would be disastrous.”

(Speaking at a news conference on March 18)

IMF MANAGING DIRECTOR DOMINIQUE STRAUSS-KAHN:

Calling the yuan “substantially undervalued,” he said: “We
think at the IMF that it is in the interests of the Chinese
economy itself to revalue the currency and I have good hope it
will go in this direction.”

(Speaking to Reuters in Warsaw on March 29)

YU YONGDING, ECONOMICS PROFESSOR, FORMER PRESIDENT OF THE
CHINESE ACADEMY OF SOCIAL SCIENCES AND EX-PBOC ADVISER:

“The People’s Bank of China should reduce its intervention
in the foreign exchange market (Read more about international currency trading. ) and allow the renminbi to
appreciate, although in what way and by how much is a debatable
matter.

“The Chinese public should realise that the renminbi
appreciation is one of the indispensable elements in China’s
paradigm shift. The renminbi appreciation will cause some
troubles for exporting enterprises but overall the benefits
will be greater than the costs.”

(From a report on the yuan issued on April 14 by voxEU.org)

ZHANG YAQIN, CORPORATE VICE-PRESIDENT AT MICROSOFT:

“The world is so intertwined that companies like Microsoft
are making a lot of investments, especially in R&D, in China.
We manufacture things like the Xbox from China and export to
the rest of the world, so when there is a yuan appreciation,
obviously that will add to costs. That will make the price of
the product higher and the U.S. customer will have to pay more.
So I don’t understand how that will balance the deficit.”

(Speaking during the April 9-11 Boao Forum)

PAN SHIYI, CHAIRMAN OF PROPERTY GROUP SOHO CHINA:

“An appropriate appreciation of the yuan will be positive
to both the economy of China and the United States. Appropriate
means a gradual rise.”

(Speaking during the April 9-11 Boao Forum)

FRED HU, FORMER CHINA PARTNER AT GOLDMAN SACHS:

“We are not talking about earthshaking changes but only
returning to the pre-crisis, elastic system of a managed float,
linking with a basket of currencies.”

Investing Advice

(Speaking during the April 9-11 Boao Forum)
(Reporting by Alan Wheatley; editing by Ken Wills)

FACTBOX-What policymakers have said lately on the yuan