TORONTO (Reuters) - Chinese officials, in an abrupt change of emphasis, said on Saturday they welcomed discussions about currencies as part of global economic talks, but insisted Bejing alone should determine policy on the yuan.
Their openness at the Group of 20 summit in Toronto to allow at least some discussion about exchange rates represented a softer line than in recent weeks.
Beijing had said previously that debate about the yuan had no place in international forums.
But the officials, a parade of department heads from the central bank, the commerce ministry and a powerful central planning agency, also tried to shift the spotlight away from the currency, saying it was only a small piece in the bigger puzzle of how China would cut reliance on exports.
“As for pressure on the exchange rate issue, I think to be precise we should call it exchange rate-related discussions,” Zhang Tao, a director-general with the People’s Bank of China, told a news conference at the start of the G20 summit of wealthy and emerging nations.
“The G20 is for discussing macro-economic issues of mutual interest and this, of course, includes exchange rates,” he said. He said China felt neither more nor less pressure about the yuan at this G20 compared with previous summits.
After weeks of calls from Washington and others for China to let its currency rise, Beijing said a week ago that it would end a de facto peg of the yuan to the dollar that had been in place for nearly two years.
A draft communique from the G20 summit welcomes China’s move to make its currency more flexible and its efforts to boost domestic demand, a G20 official said.
Asked whether this was the case, Zhang told Reuters that “discussions were not yet complete.”
The central bank has emphasized that the decision to proceed with yuan reform was taken for domestic reasons, a line reiterated at the news conference by Ma Xin, a director-general with the National Development and Reform Commission, a central planning agency.
“In China’s economic policy today, we are most focused on transforming our pattern growth. This means that we want to reduce our reliance on exports, promote the services sector, boost domestic demand and increase people’s income,” Ma said.
“So any changes in the yuan’s exchange rate are related to these domestic developments and have nothing to do with pressure from any country or international organization.”
But Yu Jianhua, a director-general in the commerce ministry, cautioned that benefits from yuan reform would be less significant than many have hoped, whether in lessening pressure on China or in reshaping its economy.
“If you only rely on exchange rate reform, it is very difficult to address trade imbalances or trade frictions,” he said.
A key question at the G20 summit has been the pace at which countries should rein in budget deficits, with fears that overly aggressive spending cuts could imperil a fragile recovery.
It was understandable that Europe was focused on addressing its fiscal woes and that the United States was more intent on shoring up growth, since these were their most pressing problems, NDRC’s Ma said.
But the debate about austerity measures versus further stimulus did not really apply to China, he said.
The government declared at the start of the year it had twin priorities of ensuring fast growth while controlling inflationary expectations, and that was still the case, he said.
“We will continue to apply an active fiscal policy and appropriately loose monetary policy, but there are two additional parts to this. We will make our policies more targeted and also more flexible,” Ma said.
Although Chinese inflation sped to a 19-month high in May, the government has begun to ease policy ever so slightly after dips in industrial output and investment growth suggested that the economy was past its peak.
Editing by Chizu Nomiyama