China calls currency system ‘product of the past’

WASHINGTON, January 16, 2011 (AFP) – China’s President Hu Jintao said Sunday the international currency system was “a product of the past,” but it would be a long time before the yuan is accepted as an international currency. Asked about the view that appreciation of the yuan would curb inflation in China, Hu suggested that was too simplistic a formula.

“Changes in exchange rate are a result of multiple factors, including the balance of international payment and market supply and demand,” he said.

“In this sense, inflation can hardly be the main factor in determining the exchange rate policy,” he said.

At the same time, Hu signalled no imminent move away from the dollar as a reserve currency, saying it would be a long time before the yuan, or renminbi (RMB), is widely accepted as an international currency.

“China has made important contribution to the world economy in terms of total economic output and trade, and the RMB has played a role in the world economic development,” he said.

“But making the RMB an international currency will be a fairly long process.”

Nevertheless, Hu noted that China has launched pilot programs using the yuan, or renminbi, in settlements of international trade and inves