Ambassador Zhang Yesui briefed the US community on China's latest decision to proceed further with reform of the RMB exchange rate regime and enhance the RMB exchange rate flexibility at a working luncheon hosted by the US Chamber of Commerce in Washington, D.C. on June 21, 2010.
Speaking on the background of the reform which was announced by the People's Bank of China on June 19, Ambassador Zhang noted that the global economy is gradually recovering, and the recovery and upturn of the Chinese economy has become more solid with the enhanced economic stability. He said that it is desirable to proceed further with reform of the RMB exchange rate regime and increase the RMB exchange rate flexibility.
In further proceeding with reform of the RMB exchange rate regime, continued emphasis would be placed to reflecting market supply and demand with reference to a basket of currencies, the Ambassador said. And he stated that the exchange rate floating bands will remain the same as previously announced in the inter-bank foreign exchange market.
The Ambassador told his audience that China's external trade is steadily becoming more balanced. The ratio of current account surplus to GDP, after a notable reduction in 2009, has been declining since the beginning of 2010. With the BOP account moving closer to equilibrium, the basis for large-scale appreciation of the RMB exchange rate does not exist.
Ambassador Zhang stressed that exchange rate is within a country's sovereignty. To further enable market to play a fundamental role in resource allocation, and to promote a more balanced BOP account and to maintain the RMB exchange rate basically stable at an adaptive and equilibrium level is conducive to the macroeconomic and financial stability in China, and will also benefit the US economy and the world economy.
He expressed China's hope that the US business community will understand and support the decision of China to proceed with the reform of the RMB exchange rate regime.
Ambassador Zhang also shared his views on China-US relations with his audience, and answered questions on China-US ties, indigenous innovation accreditation, and the G20 Summit in Toronto.
Mr. John Murphy, Vice President for International Policy of the US Chamber of Commerce, assured the Ambassador that the US companies remain committed to a stronger US-China relationship, and they look forward to working together with China to meet the challenges and contribute to a better tomorrow for this relationship.
Mr. David Marchick, Managing Director of the Carlyle Group, and more than 16 senior executives from Abbott, ACE Group, Amway, Chevron, CITI, Coca-Cola, FedEx, IBM, MetLife, Microsoft and Monsanto attended the luncheon.