Officials: All Options Open to Beat Slump

    Will the yuan appreciate or fall against the dollar? Is China's record deficit too heavy a burden on the government? Is the US$586 billion stimulus program really working? 

People's Bank of China Governor Zhou Xiaochuan (left), National Development and Reform Commission chief Zhang Ping (center) and Minister of Finance Xie Xuren meet the press in the Great Hall of the People in Beijing on Friday on the sidelines of the annual session of the National People's Congress. (China Daily)

    Three top officials -- Zhang Ping, minister of the National Development and Reform Commission (NDRC), Xie Xuren, minister of finance, and Zhou Xiaochuan, governor of the People's Bank of China, the central bank, met the press in Beijing on Friday to answer these and other questions.

    When asked about the yuan's trajectory against the dollar, Zhou said what China would like to see is "basically a stable" yuan.

    However, he did not specify whether the currency would be allowed to go up or depreciate against the dollar.

    "We have several contingency plans (that are designed to meet different market scenarios)," Zhou said. There is widespread speculation that the country may resort to yuan depreciation to help its exporters beat slumping growth.

    The uncertainty with respect to the yuan, however, may be attributed to uncertainties in developed economies, Zhou said.

    As such, China cannot afford a fixed stance on its currency, he said. It is the economies where the financial crisis originated that "should be asked to explain what their real situation is", he said.

    Most Beijing-based analysts said there was little need for a major appreciation in the yuan now. They said the currency would strengthen against the greenback in the mid- to long term.

    People should not worry about a marked depreciation in the yuan either, said Tan Yaling, an economist with Bank of China. "China's economic fundamentals have not changed, and that does not allow for conditions for a depreciation."

    Ding Zhijie, an economist at the University of International Business and Economics, said the yuan might face greater depreciation pressure in the second and third quarter if the global financial crisis worsens.

    But even that depreciation would be relatively mild and temporary, he said. "A possible scenario would be a depreciation of 1-2 percent against the dollar."

    On domestic credit flow, Zhou said Beijing's target of disbursing 5 trillion yuan ($731 billion) in new loans this year was only a "guiding, not a binding" figure.