IMF report does not fully reflect development of China's exchange regime reform: Chinese Executive Director

The International Monetary Fund (IMF) on Tuesday published a report on China, which the Executive Director for China Wang Xiaoyi said did not fully reflect the development of China's exchange regime reform.

"We are of the opinion that the report did not fully reflect the development of China's exchange regime reform, and that there is room for further discussion on the judgment of the role of the RMB exchange rate," Wang told Xinhua News Agency in Washington while commenting on the 2006 Article IV Consultation Staff Report for China.

"As a matter of fact, since the exchange reform on July 21, 2005, the Chinese government has made consistent efforts to further improve the new mechanism," said Wang.

Substantial progress has been made with regard to institution building of the market; hedging instruments have been made available to market players as well, and efforts have been made to liberalize foreign exchange controls in an orderly fashion, he said.

He said that the flexibility of the RMB exchange rate has increased, with market forces playing an essential and increasingly important role in determining its rate.

Movements of the RMB exchange rate are broadly in line with Chinese economic fundamentals, and reflect the trend of fluctuations in exchange rates of the major foreign currencies, he said.

"Along with the efforts to further the exchange regime reform with our own initiative and in a controlled and gradual manner, we have taken policy measures to adjust the economic structure and the growth pattern, and boost domestic consumption," he also said.

"These comprehensive actions will help rebalance the external accounts in time," the Executive Director added.

As defined by its Articles of Agreement, the IMF carries out its surveillance mandate through Article IV Consultations with member countries. Every 12 months, IMF staff visit its member countries for its annual consultation and afterwards prepare a report, which forms the basis for discussion by the Executive Board.

At the conclusion of the Board discussion, member countries are encouraged to comply with the transparency policy and publish the Article IV Consultation Report.

As China's economy sustains healthy and fast growth, the international community has shown increasing interest in its reform and development, the Executive Director said.

The IMF has published the Article IV Consultation Staff Report for China since 2004. During the latest consultation, the IMF staff visited China, and held discussions with the macroeconomic government agencies in May 2006, according to the Executive Director.

Source: Xinhua