China alone to decide fate of yuan

China has said it alone would decide on how to go about exchange rate reforms of yuan.

China has said it alone would decide on how to go about exchange rate reforms of ‘yuan’,although the US has been asking Beijing to let the currency appreciate to help check global trade imbalance.

At the end of the two-day economic dialogue,China’s Assistant Finance Minister Zhu Guangyao said consensus was reached between China and the US that “China will independently decide on the specific steps of its exchange rate reforms,based on its own interests,taking into account world economic conditions and China’s own development trends.”

The strategic and economic dialogue between the two countries was attended by US Secretary of State Hillary Clinton and Treasury Secretary Timothy Geithner.

In his closing remarks,Geithner welcomed a pledge by China’s top leaders to pursue currency reform as part of a broader agenda aimed at boosting domestic consumption and helping rebalance global growth.

“This is,of course,China’s choice,” he said.

Geithner said he was “as confident as I’ve ever been” that China will see that it is in its own interest to let appreciation of the yuan resume,to help curb inflation for example.

Chinese President Hu Jintao said on Monday during the opening ceremony of the dialogue that China will continue to “steadily push forward the reform of the foreign exchange rate mechanism,under the principles of independent decision-making,controllability and gradual progress.”

The remarks sparked market speculation that the government will let the currency rise in the near future.

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“Thanks to the global economic situation,China is facing less global pressure on currency revaluation and now is the opportune time to widen the band of currency flotation and to make the yuan more flexible against the dollar,” China Daily quoted Zhang Ming,an economist at the Chinese Academy of Social Sciences.

As part of the outcome of the dialogue,China also “agreed to submit a revised agreement on government procurement by July”,he said.

China has pegged the yuan to the dollar since the middle of 2008,ostensibly to help its economy through the global downturn. However,the US has accused China of deliberately pegging the yuan’s value low to give an an unfair trade advantage to Chinese exporters.