Beijing: China's pledge for a more flexible yuan will slow the nation's exports this year, adding to difficulties that include the European debt crisis and rising costs, a Chinese government official said.
"I'm not optimistic about the exports this year," Yu Jianhua, a Ministry of Commerce director general, told reporters on the sidelines of Group of 20 meetings in Toronto on Saturday. "It's essential for exporters to cut cost and keep their share in the world trade market."
China indicated on June 19 that it was scrapping the yuan's two-year-old peg to the dollar and reiterated the aim at a media briefing. The move may have muted criticism from US President Barack Obama and other world leaders ahead of the G20 talks.
Obama told Chinese leader Hu Jintao that the US welcomed China's move to allow greater flexibility of its currency and seeks a greater balance on trade, administration officials said.
Obama told Hu the decision was an important step in rebalancing the global economy and that "implementation of it will be very important," Jeff Bader, dir-ector of Asian affairs on Obama's National Security Council, said in a briefing after the two leaders met.
China, the world's largest exporter, is aiming to raise consumption and reduce reliance on exports. Measures will include a structural tax cut of about 500 billion yuan (Dh269.9 billion) this year and more subsidies to low-income families, according to Ministry of Finance director general Zheng Xiaosong.
"Our major task is to adjust the economic structure, and the exchange rate regime reform is in line with this strategic goal," Ma Xin, a director at the National Development and Reform Commission, said.
The exchange rate reform was, and should be, determined by China's economic fundamentals, not foreign pressure, Ma said.
China's decision will also help it control inflation and avoid asset price bubbles, said Zhang Tao, head of the international department at China's central bank.
He told reporters in Toronto that regime reform was "welcomed by the world" and he hasn't seen any change in pressure from the G20 countries on the issue.
