China's yuan currency can probably begin to rise more swiftly given the reforms Beijing has put in place, but gradualism is still the guiding philosophy, the head of China's central bank said on Saturday.
Chinese economic reform always follows the philosophy of gradualism. (But) probably it can be a little bit faster, People's Bank of China Governor Zhou Xiaochuan told a small group of reporters, referring to a rise in the yuan.
I think that right now the speed of moving forward (toward greater foreign exchange flexibility) ... is OK. It's good for China, he said.
Earlier, Zhou had told the International Monetary Fund's steering committee China welcomed efforts to enhance the global lender's role in monitoring the global economy, but he pointedly said the fund should not interfere on currency policy.
Each country is entitled to choose an exchange-rate system consistent with its own economic development, he told the global finance officials.
The United States has been pressing for the IMF to sharpen its surveillance of exchange rates, a step the fund's 184 member nations backed on Saturday.
China's tightly managed currency has been of particular concern in Washington, which has complained Beijing is moving too slowly in allowing the yuan to float freely on foreign exchange markets.
Finance officials from the Group of Seven countries -- the United States, Britain, Canada, France, Germany, Italy and Japan -- departed from recent practice and specifically pointed at China in a communique on Friday as a country that especially needed more foreign-exchange flexibility.
China pushed back on Saturday as Zhou offered a decidedly different view on where the bulk of responsibility lay in easing big imbalances in global trade and investment flows.
The rebalancing process will require all parties, particularly the major developed countries, to take joint responsibility and adopt a set of complementary economic policies and structural reforms, he said.
Zhou outlined a series of steps Beijing had taken since July when it abandoned a long-standing policy of pegging the yuan's value to the dollar and revalued it by 2.1 percent.
Since the implementation of these exchange reforms, the
(yuan) exchange rate has been moving in both directions against the U.S. dollar, displaying a larger flexibility based on market supply and demand, he said.
TIME TO TIGHTEN
Asked by a reporter if he had received any word of whether the U.S. Treasury might name China as a currency manipulator in an upcoming report -- a step that would open the way for trade sanctions -- Zhou said: We don't worry too much (about) what ... the other people say.
Zhou said China was managing its rapidly growing foreign exchange reserves -- the world's largest -- ably, but sidestepped the question of whether it might consider diversifying away from U.S. dollar-based assets.
I think China is among the best in managing our foreign exchange reserves. We get good returns, he said.
However, Zhou said it was always important to stay abreast of developments.
These things are very dynamic, he said. The world is changing; the foreign-exchange market is changing. So, we also need to continuously improve ourselves based on the domestic economic situation and also based on the international market.
Zhou confirmed that rapid growth in China's money supply meant the central bank would have to taken further action to clamp down on credit, but declined to offer details on what policy steps might be under consideration.
Money expansion is faster than we expect, so we should use some of monetary policy to slow it down, he said. But he also said first-quarter money supply and bank credit data were likely affected by seasonal factors and should not be used to draw definite conclusions on the underlying pace of growth.