China needs to adjust yuan rate before September

One way of relieving pressures on the yuan exchange rate is to make an adjustment on China's own initiative. (REUTERS)

China should adjust the yuan exchange rate before September to head off rising foreign pressure on Beijing, a newly appointed central bank advisor said in remarks reported yesterday.

"One way of relieving pressures on the renminbi (yuan) exchange rate is to make an adjustment on China's own initiative," Li Daokui, an economist at Tsinghua University, was quoted as saying in a report on Caijing magazine's website.

China should change its yuan policy before September because the debate on the yuan could become a more heated political issue ahead of the mid-term elections in the United States in November, he added.

On Monday, Li was appointed to the central bank's monetary policy committee along with two other economists.

Another new appointee, Xia Bin, said yesterday that China should let the yuan resume its gradual appreciation as quickly as possible.

For his part, Li said China should improve its communications with US lawmakers and various state leaders to reduce what he called a long-running "misunderstanding" about the currency issue.

China has effectively pegged the yuan near 6.83 to the dollar since mid-2008 to help its exporters ride out the financial crisis, but its stance is under growing fire from Washington.

US lawmakers and quite a few economists argue that the undervalued yuan has given Chinese goods an artificial competitive edge that is distorting the global economy. A semi-annual US Treasury report due in mid-April could label China a "currency manipulator", fuelling pressure on Beijing.

Calls for China to let the yuan rise steadily are rising among Chinese economists, fueling a debate on the currency policy.

 

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