CHINESE economist Professor Li Yining says China's decision to remove price limits at foreign exchange swap centres is a step, albeit belated, in the right direction.
Speaking in Hongkong yesterday, the prominent economist said the past policy of putting both the official exchange rate and the swap centre rate under state control was inappropriate.
''The move should have come much earlier,'' said Professor Li, an economist at Beijing University and a senior member of the National People's Congress.
Last Tuesday, China removed limits on the renminbi exchange rate against the US dollar at foreign exchange swap centres across the country, resulting in a dramatic drop in the renminbi's value.
Professor Li said the fall in value reflected the huge demand for foreign exchange at a time when the whole country was undergoing rapid economic development.
''Demand for foreign exchange can be seen everywhere. Localities short of raw materials have to increase their imports to back up their target growth,'' Professor Li said.