It's not affordable for China to continue to absorb such a huge increase in foreign exchange reserves.
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.
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.
This kind of practice is not very conducive to China's long-term growth.
More flexible as well as more transparent.
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.
Because China's fiscal situation in relatively sound, the government has relatively great leeway to use expansionary fiscal policy.
The central bank could scrap the way it automatically determines the closing rate of the yuan and determine it on its own.
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