UPDATE 1-China insists yuan reform must be gradual

* China says it will dictate pace of yuan change

* Says G20 leaders must pull together, not make accusations

BEIJING, June 22 (BestGrowthStock) – China on Tuesday stuck to its
guns on the pace of exchange rate reform, reaffirming that
change must remain gradual and controllable.

China’s trading partners are anxious for Beijing to spell
out how quickly it will let the yuan rise after it said on
Saturday that it was ending the currency’s 23-month-old peg to
the dollar.

Some leaders at this weekend’s Group of 20 summit in Toronto
might even want China to produce a schedule of sorts, Canadian
Finance Minister Jim Flaherty said on Monday. [ID:nNYC003401]

But Foreign Ministry spokesman Qin Gang said Beijing would
act as it saw fit and would not be rushed.

“I want to stress that we will adhere to further reforming
the renminbi’s exchange rate formation mechanism following the
principles of maintaining initiative, controllability and
gradualness, enhancing the elasticity of the exchange rate. This
direction will remain unchanged,” he told a regular briefing.

The yuan, also known as the renminbi (RMB), fell back on
Tuesday as the authorities made good on their promise to create
two-way movement in an exchange rate that many economists
believe is headed inexorably higher in the long run.

Qin did not give a direct answer when asked whether
President Hu Jintao would discuss the yuan in Toronto, but he
noted that previous G20 summits had not singled out individual
currencies.

“This summit is taking place when the global economy is
mounting a steady recovery and basically reviving, but that
recovery remains unsteady and uneven. So the pressing task for
G20 members is to discuss how to enhance communication and
cooperation,” he said.

As such, the imperative for leaders in Toronto should be to
demonstrate a determination to overcome adversity together.
“They should not engage in mutual accusations and pressure,” he
said.

The greatest pressure on China is being exerted by some U.S.
lawmakers, including Democratic Senator Charles Schumer, who are
threatening punitive measures against imports from China.

They are demanding that China let the yuan rise sharply to
correct what they see as an artificial undervaluation that hands
the country’s exporters an unfair advantage in global markets.

But Chen Ping, a professor at the China Centre for Economic
Research of Peking University, said Beijing should keep the yuan
pegged to the dollar to minimise currency risks for exporters.

He called Saturday’s announcement of greater exchange rate
flexibility a form of “passive defence” by Beijing to fend off
U.S. pressure at the G20 and said disputes over the currency
were likely to continue in the absence of a big shift.

“The Americans will say the Chinese are dishonest and point
out that there has been only a declaration of intent to float
the exchange rate but no change in reality,” Chen told an
academic seminar.

Stock Market Research
(Reporting by Chris Buckley and Aileen Wang; Editing by Alan
Wheatley and Chris Lewis)

UPDATE 1-China insists yuan reform must be gradual