Wed, May 27, 2009
Business > Markets

China says to keep yuan stable to help exports

2009-05-27 14:05:12 GMT2009-05-27 22:05:12 (Beijing Time)

BEIJING, May 27 - China will keep the yuan exchange rate stable to support its export sector, China's State Council said on Wednesday, just days ahead of U.S. Treasury Secretary Timothy Geithner's visit to China.

Keeping the yuan stable is part of a package of policies aimed at stabilising external demand, according to the summary of a cabinet meeting chaired by Premier Wen Jiabao, which was read out by state television.

"We have to maintain the exchange rate basically stable at a reasonable and balanced level," the statement said, reiterating Beijing's long-held policy stance on the issue.

According to the official Xinhua news agency on Wednesday, Geithner -- interviewed in Washington -- said he would not be raising questions about yuan exchange rates or China's trade surplus during his visit to Beijing next week.

The Xinhua report was in Chinese and contained no direct quotes. Geithner will be in China from May 31 until June 2 for meetings with Chinese officials.

Analysts said China has virtually repegged the yuan to the dollar at around 6.83 since the middle of 2008, citing the international financial crisis.

China's trade partners, notably Washington, argued that the yuan needed to rise in value to help ease global trade imbalances.

The cabinet said the sharp fall in exports was the "biggest difficulty" for China as it tries to keep economic growth on track.

"At present and for a certain period in the future, shrinking external demand and the resulting decrease in exports will remain our biggest difficulty for economic growth," it added.

China's exports plunged 22.6 percent in April from a year earlier, from a yearly fall of 17.1 percent in March and a decrease of 25.7 percent in February.

China's cabinet said Beijing will strengthen policy support to encourage Chinese exports, especially labour-intensive products and hi-tech ones.

Among the outlined policies, Beijing said it would offer $10 billion credit in 2009 to overseas buyers of Chinese products.

It also pledged more insurance coverage and bank credit to Chinese exporters.


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