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BEIJING, Feb. 21 (Xinhuanet) -- China's central bank
on Tuesday said yuan will stay stable in 2006, while American manufacturers
allege the Chinese currency is "undervalued" by as much as 40 percent.
The value of the Chinese currency will stand at a
reasonable and balanced level, the People's Bank of China (PBoC) reiterated in a
report.
It pledged to upgrade the managed, floating exchange
rate system to cater to the need of China's economic development and financial
stability, in an "independent, controllable and progressive" way.
American manufacturers argue that the yuan is kept
"artificially lower" to make Chinese goods cheaper for American consumers and
U.S. products more expensive in China, and the U.S. government says China
accounted for a quarter of the country's trade deficit last year.
Pressure on China for another yuan revaluation is
reportedly increasing.
But the PBoC report said, "The exchange rate plays a
certain role in adjusting international payments, but it is not enough for the
exchange rate alone to take that responsibility."
Policies on foreign trade, resource pricing and
foreign exchange management should combine to promote the balance of
international payments, it added.
The Chinese currency has gained nearly 3 percent
against the U.S. dollar since its July 21 revaluation, trading at a central
parity rate of 8.0485 versus the dollar on Tuesday.
Early this year, China began a new policy of
calculating the yuan's value against the U.S. dollar using a weighted average of
the prices given by major commercial banks. The highest and lowest offers are
excluded from the calculation.
Giving banks a role in setting the new daily
benchmark, or the central parity rate, is seen as a sign that the PBoC is
willing to allow market forces a greater role in daily trading, analysts
acknowledge.
The market force will play a "fundamental" role in
the determination of the yuan's value, the central bank reiterated in its
Tuesday report.
A central bank survey last November on 1,113
enterprises with foreign trade rights showed that Chinese enterprises responded
positively to the new exchange rate mechanism.
Nearly three-quarters of these enterprises say their
exports either rose or kept stable in November.
Earlier figures showed that trade surplus prompted
China's foreign exchange reserves to surge to 818.9 billion U.S. dollars by the
end of last year, second only to Japan.
The PBoC has stressed that a floating yuan is not
simply one that will appreciate, but the prevailing view among industry watchers
is that the yuan will strengthen gradually this year. Enditem | 
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