Zhu Rongji

Beidaihe talks set to focus on yuan's future

PUBLISHED : Saturday, 08 August, 1998, 12:00am
UPDATED : Saturday, 08 August, 1998, 12:00am

The upcoming Beidaihe leadership meeting could settle a series of contentious issues including whether to devalue the yuan.

A Beijing source said yesterday there was a divergence of views on several economic and political policies.

On the value of the yuan, the source said Premier Zhu Rongji was still leaning towards maintaining the currency's value for the foreseeable future.

However, there was a growing pro-devaluation lobby, including the heads of companies trading overseas and coastal leaders, whose views could not be disregarded.

A 'new consensus' on the issue may emerge at the annual leadership conference at the Beidaihe summer resort, due to start in about a week. 'Zhu is still adamant about not devaluing at this point,' the source said.

'But compared to early this year, the economic tsar is more willing to listen to the views of those who favour devaluation.

'While Zhu had imposed a news blackout on the subject in the official media, he has allowed internal debate on the subject.' It is believed the leadership will discuss the movement of the Japanese yen and the likelihood that Tokyo will respond to pressure from the Chinese and American governments to prop up the yen.

Domestic factors to be considered include China's export markets and foreign exchanges reserves, which dipped slightly from May to July.

Arguments within the leadership have also broken out over administrative streamlining, which is masterminded by Mr Zhu.

A diplomatic source said Mr Zhu had encountered opposition from several politburo members, who had given support to ministries that expressed reservations about shedding large numbers of civil servants.

The source said Mr Zhu had sought the support of President Jiang Zemin on the subject.

'Zhu reportedly told Jiang that unless there is clear-cut support coming from him on drastic administrative downsizing, the goal cannot be accomplished,' the source said.

'Jiang has indicated that politburo members and top ministers should discuss the subject at Beidaihe and come to a consensus.'