China to avoid currency devaluation to boost exports

Governor of the People's Bank of China Yi Gang attends a press conference on the financial reform and development for the second session of the 13th National People's Congress (NPC) in Beijing, capital of China, March 10, 2019. [Photo: China Plus]

China's Central Bank Governor, Yi Gang says China and the United States have discussed avoiding currency devaluation to boost exports during their trade negotiations.

Yi Gang was speaking at a news conference on the sidelines of the country's legislature session underway in Beijing.

He says China will continue to implement prudent monetary policy.

Speaking in Beijing, China's Central Bank Governor, Yi Gang told the media that China and the US negotiators reached a consensus on a number of crucial issues during their latest round of trade talks late last month in Washington.

Without devulging what was agreed on, Yi Gang highlighted what was discussed, which included the need to observe the autonomy of each other's monetary policy.

"The two sides discussed how to respect the autonomy of each other's monetary authorities in determining the monetary policy. Secondly, we discussed mutual adherence to the market-decided exchange rate."

The issue of exchange rates is a long-standing topic between the two countries. Yi Gang – who has been part of the Chinese team at the trade talks with the US - said both sides pledged to abide by the commitments made at previous G20 summits. He further said they also discussed the need to disclose data in line with the International Monetary Fund standards.

"We discussed to honor the commitments made at previous G20 summits such as choosing not to adopt competitive depreciation, not to use exchange rates for competition purpose, and maintain close communication on foreign exchange markets."

The Central Bank Chief told the media that China's prudent monetary policy has not changed. He said the prudent policy should stress counter-cyclical adjustment, and ease or tighten when appropriate. As China faces a period of slowing economic growth, Yi Gang reiterated the stance of focusing on supporting the private sector.

"This prudent monetary policy should have a better structure. That is to say, more efforts will be made to support small and micro businesses and private companies."

Yi Gang says China's monetary policy, mainly devised to fit the domestic economic situation, will also take into account global factors and China's position in the global economic system, as well as the export-oriented sectors. He said the prudent monetary policy should strike a balance between internal and external factors.