Yuan shot heard round the world but quiet in China


China’s announcement that it will resume currency reform made waves globally but caused barely a ripple at home on Sunday, with major newspapers merely reprinting the central bank’s statement.
The People’s Daily, the main organ of the ruling Communist Party, put the news on its back page, while the banner headline on the website of the official Xinhua news agency was about torrential rain in southern China.
Subdued domestic reporting of the central bank’s decision to make the yuan more flexible after locking it to the dollar for nearly two years marked a sharp contrast to the global reaction.
Leaders of the United States, the European Union, Japan and the International Monetary Fund, among others, all welcomed the move as a hopeful contribution to balancing the world economy.
Chinese economists who spoke to clients and foreign reporters said it was a step that was justified economically and, above all, had a political aim.
“This important declaration by the Chinese government coming before the G20 summit is a big concession to prevent the yuan’s exchange rate from being politicised by Western countries,” said Gao Shanwen, chief economist at Essence Securities in Beijing.
Global equity markets may rally on Monday as the news, coming a week before a Group of 20 meeting in Canada, eases fears of a trade row between the United States and China at a delicate time for the world economy.
The People’s Bank of China said in its statement that holding the yuan in a de facto peg to the dollar since July 2008 had helped mitigate the impact of the global financial crisis and spur the world’s recovery. — Reuters


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