More flexible exchange rate system promised
By Zhang Dingmin and Su Bei (China Daily)
Updated: 2005-10-18 05:51

China affirmed yesterday its intention to enhance the flexibility and strengthen the role of market forces in its managed floating exchange rate regime.

Concluding the 17th Session of the China-US Joint Economic Committee in Beijing, China and the United States agreed that exchange rate policy was a sovereign decision, but can have a global impact.

U.S. Treasury Secretary John Snow, left, shakes hands with Chinese Premier Wen Jiabao during their meeting in Beijing Monday, Oct. 17, 2005. [AP]

Excess volatility and disorderly movements in exchange rates are undesirable for economic growth, the two sides reaffirmed in a joint statement.

US Secretary of the Treasury John Snow said at an earlier press conference yesterday that he was encouraged by China's progress in reforming its exchange rate regime and developing the financial markets to aid economic growth.

But he also said it would take time for China to prepare for further reform moves, including building necessary financial infrastructure, telling reporters: "We recognize that's going to take some time. China is clearly taking steps to put those mechanisms in place."

He also called a proposed US legislation on slamming penalties on China over the currency issue "ill-conceived."

According to the joint statement, China reaffirmed its commitment to further advance reform in the financial sector by opening up the sector to competition, strengthening prudential supervision and risk management, improving corporate governance and continuing progress in the corporatization and listing of State-owned enterprises.

China and the US agreed to enhance co-operation in financing sector reform and supervision, the statement said.

China said that the United States should support the full range of Chinese Multilateral Development Bank projects and expressed its intention to join the Inter-American Development Bank (IADB).

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