(Archived Content)
FROM THE OFFICE OF PUBLIC AFFAIRS
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The international trading system works best with free and fair trade, with the free flow of capital and with currency values set in open, competitive markets. We recognize the importance of theChinaexchange rate issue. In fact, the Bush Administration has had an unprecedented level of engagement with the Chinese in urging them to move more rapidly to a flexible, market-based exchange rate.And, as a result of these efforts, the Chinese have agreed that making this transition to a market-based exchange rate is one of their top priorities.Governor Zhou ofChina’s central bank, for example, declared that `building a more market-driven trading system for the renminbi is now a task of top priority.'
Secretary Snow and other Treasury officials have held extensive meetings and consultations with the Chinese economic team both here inWashingtonand inBeijing. We have established a Technical Cooperation Program between theU.S.andChinadesigned to facilitate a move to a market-based exchange rate regime inChina. Through this program and many other extensive discussions through senior Treasury officials and our Embassy inBeijing, we remain closely engaged with the Chinese on these issues. An important component of our efforts has also been to build international support for our policy. We have worked with the finance ministers in the Group of Seven nations and at the Asia Pacific Economic Cooperation (APEC) forum to promote a common view that major economies likeChinashould adopt flexible exchange rates.
Due to our engagement with the Chinese on the currency issue, they are moving in the right direction.The Chinese are actively taking important measures to modernize their financial infrastructure to prepare for a flexible exchange rate regime.Chinahas taken steps to liberalize capital flows to deepen markets involving foreign currency transactions.It has worked to strengthen its banks and bank supervision, and to prepare these institutions for exchange rate flexibility.AndChinahas taken steps to provide the financial products to support foreign exchange trading and hedging of exchange rate risk.These are key steps inChina’s progress toward a flexible, market-based exchange rate regime.While these are positive developments,Chinamust continue to do more.To ensure progress continues, we will act as aggressively as necessary to achieve results on this issue.
We remain committed to the approach outlined by Secretaries Snow, Evans, Chao, and Ambassador Zoellick during their joint press conference on this matter in late April. With steady progress being made, the most effective way at this time to achieve the goal of a flexible, market-based exchange rate inChinais to maintain the persistent engagement we have established.
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