China Denies Intent to Gain Competitive Trade Advantage by Devaluing the 'Yuan'
Beijing, Oct 8 (KUNA) -- China affirmed on Thursday that it has no intention of gaining a competitive advantage in trade by devaluing its currency, the yuan, noting that the growth of Chinese trade is primarily due to the rising international competitiveness of its domestic industry. This was stated in a document issued by the People’s Bank of China to explain its stance on yuan exchange rate policy amid growing debates over global economic imbalances.
Xinhua News Agency quoted the document as saying that China has never resorted to adopting a competitive devaluation policy for the yuan, nor does it need to do so. It added that the exchange rate is influenced by many factors, including economic growth, monetary policy, financial markets, geopolitical issues, and unexpected events, and that there is no “simple linear” relationship between the exchange rate and the current account balance.
The document pointed out that global economic imbalances are closely linked to the evolution of the global division of labor structure, inherent contradictions in the international monetary system, high fiscal deficits, and elevated consumption levels in some countries, which calls for concerted efforts by all parties to address them.
It stressed that some countries attribute the decline in the competitiveness of their domestic industries, fiscal indiscipline, and complex structural problems to the exchange rates of other countries, noting that this is merely an attempt to shirk responsibility for carrying out necessary reforms.
It further added that internationally used methods for assessing balanced exchange rate levels are immature; therefore, relying on the results of a specific assessment as an “official reference” to prove that the yuan’s exchange rate is undervalued relative to its fundamental value constitutes a “distortion of assessment results and a misuse of them.”
The document noted that China implements a floating exchange rate regime based on market supply and demand, guided by a basket of currencies for adjustments, and maintains that the market should play a decisive role in exchange rate formation. It observed that since 2010, the yuan’s exchange rate has gone through several cycles of appreciation and depreciation, and its flexibility has increased. (End) S.L.Q./M.M.J.
