China will carefully open up its yuan to more trading based on market needs and plans to double its level of imports in five years, its commerce minister said on Thursday, as the country liberalizes its economy, now the world's second largest.
The yuan CNY=CFXS is a sticky issue between China and its major trading partners, even as China's trade surplus narrowed for a second year straight year to $183.1 billion in 2010.
Over the next year or for an even longer period, China will continue to stick to our mechanism of liberalizing the yuan according to market needs, Commerce Minister Chen Deming told reporters at the World Economic Forum in the ski resort of Davos.
China has been gradually making its currency, the renminbi, which means the people's money, more international, with the nascent offshore yuan market in Hong Kong growing rapidly in less than a year since trade settlement and investment rules.
The yuan is expected to hit 6.3 per dollar by the end of 2011, a poll in January showed, rising 4.5 percent from Thursday's trade.
As China slowly strengthens its yuan and boosts domestic consumption, it will also import more goods, such as commodities and consumer products.
We expect import trade to double in the next five years, Chen said in a news conference, adding that China hoped to double imports from the United States to $200 billion over the same period.
We would like to import from the U.S. what we need, such as raw materials, technology and equipment, as well as daily necessities needed by ordinary Chinese.
Earlier in the day, the chairman of Industrial and Commercial Bank of China (ICBC) said Beijing wanted to import more to solve its trade imbalances, instead of parking windfall revenue in U.S. and euro-zone government bonds.
We're obliged to spend the money (in) U.S. bonds, etc. China also wants to change this kind of situation. We should import to balance our trade and increase our foreign investments, said Jiang Jianqing, the head of ICBC, the world's largest lender by market value.