Chinese exporters are coping well with a rising yuan, and Beijing will stick to plans for gradual reform in the currency, a senior central bank official said on Friday.
Li Dongrong, an assistant governor at the People's Bank of China, told a forum of Chinese exporters and importers that the central bank will closely monitor the impact of a stronger yuan on economic activity on the ground.
Li's remarks came ahead of a state visit by President Hu Jintao to the United States next week when he is likely to be pressed by Washington about the value of the yuan, a constant source of tension in China-U.S. ties.
We will closely monitor and analyse the impact of reforms in the yuan on the real economy and the trade sector, Li said, adding that Chinese firms were gradually becoming used to a stronger currency.
Washington wants Beijing to let the yuan rise more quickly against the dollar to shore up U.S. exports to China and foster weak U.S. growth. [ID:nL3E7CA05U]
China, for its part, worries its crucial export sector will suffer if the yuan rises too quickly. Beijing says it should not be pressured over the value of its own currency. Even so, the central bank has been guiding the yuan to record highs against the dollar ahead of Hu's U.S. visit. [CNY/]
The yuan has risen nearly 3.5 percent against the dollar since it ended its peg to the U.S. currency in June. From the time of its landmark revaluation in 2005, the currency has risen about 25 percent.
Asserting that Chinese businesses have taken a firmer yuan in stride, Li said exports from labour-intensive sectors have recovered to levels seen before the global financial crisis.
He said China's overall shipments abroad have also hit a steady string of record highs.
China's central bank is the country's leading proponent for a stronger yuan since it wants a firmer currency to help balance the nation's trade account. Yuan policy is decided by top leaders in China's government, which also controls the central bank.
Huo Jianguo, a director at the Chinese Academy of International Trade and Economic Cooperation, a think tank linked to the trade ministry, said Chinese exporters need to guard against currency risks.
Importers and exporters must establish a counter-risk system, Huo told the same forum. You must make changes any time you feel there is a rising currency risk. Otherwise, when risks come together, it'll be too late to do anything.