Because China's fiscal situation in relatively sound, the government has relatively great leeway to use expansionary fiscal policy. |
Even if the yuan ultimately needs to appreciate by 10 percent or more, it doesn't mean we need to do it all at once. |
In the future, we will allow market forces to play a bigger role in setting the exchange rate, but we can never rule out market interventions. |
It is a pity that when we made such an important change, we didn't get any commitment from the U.S. and other countries |
It's not affordable for China to continue to absorb such a huge increase in foreign exchange reserves, |
more flexible as well as more transparent. |
More seriously, China's economy would take a big hit if the US dollar weakened sharply due to such factors as a bursting of the US property bubble. The loss for China's foreign exchange reserves would be extremely serious. |
Personally, I think there will be several further changes. |
The central bank could scrap the way it automatically determines the closing rate of the yuan and determine it on its own. |
This kind of practice is not very conducive to China's long-term growth. |