China urges major countries to stabilize currency

5th Round of China-U.S.

Strategic Economic Dialogue

Backgrounder: China-U.S. Strategic Economic

Dialogue

Special

Report:Global Financial Crisis

BEIJING, Dec. 5 (Chinese media) -- China Friday urged major countries to stabilize

their currency, which is "very important" for a stable international financial

environment.

Addressing a press conference held here Friday after the fifth Sino-U.S.

Strategic Economic Dialogue (SED), Zhu Guangyao, assistant minister of finance,

said: "a stable external economic environment is very important for those

developing countries affected by the global financial crisis. We hope major

industrialized countries to shoulder the responsibility and take measures to

maintain a relevant stability of the currencies."

Though it was not listed as a topic of the SED, currency issue aroused

great concern prior to the highest-level dialogue between China and the United

States given the recent decline of RMB in value against the U.S. dollar.

The yuan fell as low as 6.8845 per U.S. dollar on the over-the-counter

market on Thursday morning, declining by the 0.5 percent daily limit. It is

allowed to trade by up to 0.5 percent against the U.S. dollar on either side of

the central parity (reference) rate.

In a fact sheet issued by the U.S. after the SED, the United States

recognized that "currency movements would be uneven over shorter periods", but

also encouraged China to "continue, and accelerate" the appreciation and

flexibility of the yuan.

Zhu stressed that China will reform the floating exchange rate policy,

which is based on market demand and adjusted and managed according to a bucket

of currencies, in the principle of self-initiated, gradual and controllable

change.

China will give a greater role to the market demand in RMB exchange rate

formation, make the exchange rate more flexible and maintain its stability in a

reasonable and balanced level, Zhu said.

The two-day fifth SED was concluded here on Friday morning. The two sides

reached important consensus on the financial turmoil and critical issues of the

two economies and issued a fact sheet.