China will strengthen the flexibility of the yuan
A symbolic announcement just days before the opening of the G20 summit in Toronto. The People's Bank of China, the Chinese central bank, announced Saturday that it had decided to continue the reform of the mechanism of the exchange rate of the renminbi (yuan's other name) in order to "increase the flexibility .
"The world economy is recovering gradually. The recovery and rebound of the Chinese economy is increasingly confirmed, leading to greater economic stability, "argued the central bank in a statement published in English on its website. "It is therefore advisable to take the reform of RMB exchange rate."
Since summer 2008, the yuan has remained stuck at around 6.83 against the dollar, fluctuating within a very narrow margin vis-à-vis the greenback.A contentious issue between China and its trading partners, most notably the United States, who believe that the yuan is undervalued, allowing Beijing to sell its products for export at very competitive prices.
In a letter to heads of State and Government of the G20 on Friday, President Barack Obama had given the record of the yuan on the table, a reference to it. "I also want to stress that exchange rates determined by the market are essential to global economic vitality," he wrote in his letter.
China has always rejected international pressure. The Deputy Foreign Minister, Cui, had also insisted on Friday that the issue of the yuan would not be up for discussion G20 payday loan companies. "The renminbi is the currency of China.This is not something that the international community needs to discuss, "he told a joint press conference with Zhang Tao, head of international department of the Central Bank.
A move immediately welcomed
Announcing this on Saturday continued reform of the yuan, the central bank has focused on "China's efforts to encourage a global rebalancing. The institution has admitted that the "special policy" introduced by Beijing in the heart of the global financial crisis had perhaps more reason to be in a context of economic recovery, but recalled however that "the stability of the yuan has played a major role in mitigating the impact of the crisis, which has contributed significantly to the recovery in Asia and the world.On the other hand, the central bank has insisted that the gradual return to a flexible exchange rate of the currency does not mean "great changes or major changes, namely a re-evaluation.
The gesture was appreciated nonetheless. Timothy Geithner, U.S. Treasury Secretary, said in a statement that the reform of the yuan could make a "positive contribution" to global growth. "We welcome the decision by China to strengthen the flexibility of its exchange rate," he said. The Director General of the International Monetary Fund (IMF), Dominique Strauss-Kahn also found that Beijing's decision was "very encouraging".
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