WTO chief refuses to give his two cents' worth on yuan rate
Daniel Ren in Shanghai
World Trade Organisation director-general Pascal Lamy yesterday refused to be drawn into the controversy surrounding the yuan exchange rate amid China's increasing influence on global trade.
Addressing a conference in Shanghai, Lamy said: 'I have no specific comments on currency issues in public. Most economists would agree that a short-term volatility in exchange rate does not impact on trade flows.'
The director-general's remarks came after Yi Gang, a deputy central bank governor, said last month that China would actively settle trade disputes through negotiations rather than trade wars while adjusting yuan's exchange rate.
China leapfrogged Germany to become the world's leading exporter last year with its overseas shipments accounting for 10 per cent of the globe's total.
Beijing had maintained the yuan's de facto peg to the US dollar at about 6.80 for two years until last month when it promised to make the exchange rate more flexible, managing it against a basket of currencies.
But the central bank ruled out a one-off revaluation or major appreciation. Since then, the Chinese currency has gained 0.8 per cent against the greenback.
China reported a trade surplus of US$20 billion in June, the biggest in nine months, benefiting from a recovery in external demand.
The country's widening trade surplus that beat many economists' expectations added pressure on Beijing to revalue its currency.
Last month, exports jumped 43.9 per cent from a year earlier while imports grew 34.1 per cent.
'The WTO is a system where these questions [of currency] can be addressed rationally,' Lamy said. 'Nothing will be 100 per cent perfect.'
He added that since China joined the trade organisation in 2001, the country's social and economic structures had been transformed.
'Given the magnitude of this transformation, I sense that it has happened in a relatively smooth way,' Lamy said.
He said China could enhance its competitiveness in global trade by combining the country's natural, labour and capital resources properly, not simply through addressing the exchange rate.
The WTO forecast in March that global trade would grow 9.5 per cent this year after declining 12.2 per cent in 2009 with China and India leading the rebound.