China should allow the renminbi to fall when other emerging market currencies are weakening, a leading government researcher has said.
China’s central bank has talked about introducing more two-way volatility in the renminbi’s trading, but the idea of allowing outright depreciation has rarely been voiced publicly in official circles. Premier Wen Jiabao pledged last month to stabilise the exchange rate to support exporters.
Fan Jianping, chief economist of the State Information Center, a think-tank within the powerful state planning bureau, said that signs money was leaving China suggest now may be the time for the country to allow its currency to weaken. He added that a continuing fall in China’s foreign exchange reserves, which dropped $61bn to $3,202bn in September, would be evidence of the kind of capital outflows that should trigger depreciation.