China defends its currency policy

June 8, 2005 at 4:52 PM

BEIJING, June 8 (UPI) -- China's central bank leader says foreign calls for its currency to float as a way to cut its trade surplus are politically motivated.

Zhou Xiaochuan, governor of the People's Bank of China, said the renminbi's importance in the global economy had been exaggerated, the Financial Times reported Wednesday.

In fact, he said, Beijing was moving to cut its trade surplus by stimulating domestic consumption and reducing investment.

Zhou also said that calls for an immediate float of the currency were motivated by political opportunism.

China's central bank wants first of all to arm the nation's financial institutions and enterprises with the skills to manage the greater exchange rate risks that will come with increased flexibility to the renminbi, Zhou said.

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