China already proceeds rapidly in its currency exchange regime, official
Chinanews, Beijing, Oct. 11 ¨C In a recent interview given to Finance and Economics magazine, Governor of the People’s Bank of China Zhou Xiaochuan said that allowing more flexibility in the Renminbi exchange rate had already become a clear goal for the exchange rate regime, under which supply and demand relations in the market would become more important. Right now, the reference of a basket of currencies to which Renminbi is pegged is diminishing while market factor is playing an increasingly important role.
He said that Renminbi exchange rate regime should be a process which should follow the principles of “proceeding in a controllable and gradual way and keeping the initiative in our own hands”.
The process of the Renminbi exchange rate regime depends on the current conditions of other factors related with it. The reform cannot proceed without considering other related factors. So far, the Renminbi exchange rate regime has already made great progress and the main part of the system has already been changed to be market-oriented. Judging from related factors, it can be said that the reform has already proceeded rapidly enough, Zhou Xiaochuan noted.
He pointed out that the opening of the capital projects in China should be based on two pre-conditions: first, related financial system should be operated in a healthy way — when management is still at a relatively low level and institutional reforms have not been well applied in some micro aspects, we should not hastily open up the capital market; secondly, before we open the capital industry, related legal system should be improved to effectively protect the property rights to prevent large amounts of capital from flowing outside the country.