Economy

China keeps yuan stable, uneasy about US dollar

(Xinhua)
Updated: 2010-01-07 21:59

ANKARA: China's Commerce Minister Chen Deming said here Thursday the stability of the Chinese currency contributes to the recovery of the world economy while voicing concerns over the strength of the US dollar.

China keeps yuan stable, uneasy about US dollar

Chinese Commerce Minister Chen Deming (L) meets with Turkish State Minister Zafer Caglayan in Ankara, capital of Turkey, on Jan. 7, 2010. [Xinhua]

"The Chinese government has stated on many occasions it will keep the exchange rate of the yuan, or Renminbi, basically stable," said Chen during a visit to the Turkish capital Ankara, adding "We feel that is an important support and contribution for the world economy, which is undergoing a crucial period of recovering."

An unstable currency of China, whose trade volume accounts for about 10 percent of the world's total, would have a great impact on the global trade, Chen told a joint press conference with Turkish State Minister for Foreign Trade Zafer Caglayan.

China's major trade partners have complained about an undervalued yuan, which they said give price advantages for Chinese exports. The yuan has gained more than 21 percent against the greenback since the currency was unpegged from the US dollar in July 2005.

Chen said China will press ahead with reforms for a controllable, freely floating Renminbi exchange rate, while reiterating China's concerns about the value of the US dollar.

Chinese Commerce Minister Chen Deming (1st L) and Turkish State Minister Zafer Caglayan (2nd L) attend a joint news conference after their meeting in Ankara, capital of Turkey, on Jan. 7, 2010. [Xinhua]

"Recently we're more concerned about whether the US dollar can maintain its stability and strength, as China holds a large amount of US dollar-denominated bonds," said Chen.

China is the biggest holder of US Treasury securities, with its holdings totalling US$798.9 billion in value as of the end of October 2009, according to US Treasury data.

Caglayan, who met Chen on Thursday morning, said the two sides had discussed the possibility of using local currencies in bilateral trade and China's purchase of Turkish bonds.

Chen said China is experimenting with Renminbi settlement with countries which have relatively balanced bilateral trade with China and that the practice will be expanded and promoted after maturing.

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