China's equivalent to Alan Bollard, People's Bank of China Governor Zhou Xiaochuan, has given the US the clearest signal yet that the speed at which the booming Asian giant opens itself to market forces, including changes to the exchange rate, can be accelerated.
"Chinese economic reform follows the philosophy of
being gradualist," Zhou told reporters in Washington after being asked if the yuan would be allowed to strengthen faster.
Change "probably can be a little bit faster", he said.
Pressure is increasing on China to speed gains in the yuan, which has advanced 1.2 per cent since a revaluation last July.
On Friday the Group of Seven called on China to further loosen its grip on the currency, which is blamed for a record US trade deficit.
Zhou hinted that quicker changes face resistance among some Chinese officials and companies.
Some "may call for faster reform and some may call for slower" changes, Zhou said.
"Exporters may say they worry very much about that."
A surge in exports of inexpensive toys, televisions and clothing helped China's economy expand 10.2 per cent in the first quarter from a year earlier, the fastest pace among the world's major economies.
It also sparked complaints from legislators in the US, who say the Government is keeping the currency artificially low.
"China has been moving - very slowly - but the speed is very much dependent on their ability to withstand reforms," Stephen Roach, chief global economist at Morgan Stanley in New York, said at a conference on China's Hainan island.
"The idea of forcing China and other countries to move on the currency front is a bad one."
The G-7 gathering followed a meeting between President George W. Bush and Chinese President Hu Jintao at the White House that did little to narrow differences over China's exchange-rate system.
China should eliminate restrictions on conversion of currencies for trading purposes and undertake a "gradual" easing of limits on foreign exchange purchases for investment, Zhou said.
On growth in money supply and lending, Zhou said the Government "should use monetary policy to slow it".
- BLOOMBERG
