BEIJING — Facing growing pressure from around the world, China’s central bank announced Saturday that it is prepared to allow the country’s currency to float more freely against the dollar and other foreign currencies.
The statement, from a bank spokesman, gave no details of when China would allow its currency — known as the renminbi or yuan — to appreciate and by how much. But the timing of its release, just before the leaders of the world’s largest economies gather for a G20 meeting in Toronto, appeared clearly aimed at taking pressure off Beijing over the issue.
Many countries, including the United States, have criticized China’s fixed exchange rate, which critics say was keeping the value of Chinese exports artificially low.
The bank spokesman said the fixed exchange rate had helped China weather the global financial meltdown that started in 2008.
“The stability of the (renminbi) exchange rate has played an important role in mitigating the impact of the crisis, contributing significantly to Asian and global recovery and demonstrating China’s efforts in promoting global rebalancing,” the spokesman said, according to the Xinhua News Agency.
But now, the spokesman said, the global economy has recovered enough and China’s own economic growth appears solid enough to allow more flexibility in the exchange rate.
The move was immediately welcomed by the White House, which saw it as a vindication of President Barack Obama’s nonconfrontational policy of trying to quietly negotiate over the exchange rate.
Obama said in a statement that “China’s decision to increase the flexibility of its exchange rate is a constructive step that can help safeguard the recovery and contribute to a more balanced global economy.”
Treasury Secretary Timothy Geithner said: “We welcome China’s decision to increase the flexibility of its exchange rate. Vigorous implementation would make a positive contribution to strong and balanced global growth.”
