OREANDA-NEWS. October 10, 2011. We are deeply regretted that the U.S. Senate voted to proceed to consideration of Currency Exchange Rate Oversight Reform Act, reported the press-centre of PBC.

Global imbalance is a long-standing issue resulting from multiple factors. The trade imbalance between China and the U.S. is attributable to a range of relevant factors, rather than RMB exchange rate alone, which include different investment and trade structures, diverging savings and consumption patterns, different division of labor in global industrial chain of the two countries, and the drawback in the current international monetary system.

Over recent years, China has been committed to economic restructuring, reducing current account surplus and promoting a more balanced BOP account. To boost domestic demand, China has adopted a series of measures, including encouraging consumption, developing the service sector, and enhancing social security net, medical service, housing and education. These efforts successfully improved China’s economic structure and helped China move towards a more balanced BOP account. As a result, China’s current account surplus as a percentage of GDP has been falling steadily, dropping from 10.1 percent in 2007 to 5.2 percent in 2009 and 2010, and further to 2.8 percent in the first half of 2011. Meanwhile, the RMB exchange rate has become significantly more flexible since China furthered the RMB exchange rate regime reform last year. In fact, RMB has appreciated remarkably in real terms and is moving closer to its equilibrium level taking domestic inflation into account. Historical evidence shows that the managed floating exchange rate regime based on market supply and demand with reference to a basket of currencies is in line with China’s realities, and is conducive to international economic and financial stability and development. We will continue to progressively promote the reform of the RMB exchange rate regime, and make the exchange rate more flexible in a self-initiated, gradual and controllable manner.

In the context of a sluggish global economy and weak confidence, an external environment where all countries work together to tide over difficulties through concerted efforts is of critical importance. At this juncture, the vote by the U.S. Senate cannot help address the problems of insufficient savings, trade deficit or high unemployment in the U.S.; on the contrary, it might seriously affect the progress of China's reform of the exchange rate regime and might also result in a trade war that no one would like to see. From the perspective of the U.S. experiences, politicizing economic issues does not help solve the problems per se, but would rather complicate the problems, and adversely impact economic recovery and market confidence. We hope that the U.S. administration, the Congress and all the American people of insight will take effective measures to prevent the exchange rate issue from escalation and trade protectionism from spreading. We need to maintain the good momentum of the Sino-U.S. relationship, and to work together to contribute to strong, sustainable and balanced growth.