China c.banker says freer yuan to boost competitiveness
BEIJING Dec 2 (Reuters) - A freely convertible yuan would help shore up China's competitiveness and the currency's gradual appreciation has benefited the economy by lowering import costs, a senior central bank official said in remarks published on Monday.
A freely convertible yuan would expand China's capital markets and outbound investment, which would "undoubtedly enhance China labour productivity and competitiveness", said Yi Gang, a vice central bank governor.
Yi payed down fears of a surge of hot money inflows once China makes the yuan convertible on the capital account, as he said there would be a regulatory system to monitor foreign borrowings and cross-border capital movements.
A top-level party meeting called for quickening the pace of making the yuan fully convertible, and the central bank has pledged to make the yuan "basically convertible" by 2015.
The central bank would introduce greater two-way fluctuations in the yuan to make it more flexible and market-driven, Yi said.
He said the yuan, which has gained about 35 percent since the landmark revaluation in 2005, was close to equilibrium.
The yuan rise had made imported goods, such as soybeans and crude oil, cheaper on the domestic market, he added.
"The appreciation has put pressure on exporters, but we should also see that the appreciation has brought considerable benefits for the masses," Yi said.
Yi also said that the central bank, which freed up bank lending rates in July, would move to liberalise bank deposit rates when "conditions are ripe". (Reporting by Kevin Yao; Editing by Nick Macfie)