China committed to move ‘steadily’ toward flexible exchange rate

Yahoo! News: “China vowed to move ‘firmly and steadily’ toward a flexible exchange rate during a meeting of Chinese and US officials in Washington Thursday, the US Treasury Department said in a statement.

The Chinese delegation ‘reaffirmed China’s commitment to further advance reform and to push ahead firmly and steadily to a market-based flexible exchange rate, and described the steps the Chinese government has taken to create conditions to establish a more flexible exchange rate,’ the statement said.

The United States and its G7 partners had maintained that the Chinese currency, pegged to a weak dollar, makes foreign goods too expensive — and thereby less competitive — in China, while leaving Chinese exports unfairly cheap in foreign markets.

Some analysts have said a free-floating yuan could boost US exports and thereby help reduce Washington’s massive current account deficit, which IMF Managing Director Rodrigo Rato has characterized as a threat to the world economy.

Rato had said earlier that China should take advantage of a growth rate expected to hit nine percent this year to allow greater flexibility in its exchange rate mechanism. “

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