State Council-controlled China Everbright Holdings chairman Zhu Xiaohua says the yuan will not be devalued for the next three years, because a stable yuan would help to speed the return of foreign investment to the mainland.
'In the next three years the yuan can be kept stable, but in the next five years, I won't know [even] the US dollar's future,' the former central bank deputy governor told a Salomon Smith Barney forum yesterday.
His confidence in a stable yuan was backed by the mainland's success in improving economic fundamentals over the past four years, he said.
Inflation was kept under control while maintaining respectable economic growth.
With an ample surplus on current and capital accounts as well as huge foreign exchange reserves, Mr Zhu said: 'I must say, 1997 was the best year for China's economy in the past 10 years.' Beijing's tight control on capital flow also meant it could maintain a stable yuan, he said.
He said the mainland's regional disparity in economic development had meant it would have larger flexibility in adjusting production costs from the more expensive coastal cities to inland cities, in the wake of the low-cost export bases in the region.
Mr Zhu said foreign direct investment would be boosted by a stable yuan.
