China says no major changes in exchange rate

BEIJING — China's central bank said Sunday it would maintain a stable exchange rate and didn't anticipate major changes in the value of the yuan, a day after saying it would manage the currency more flexibly.

In a commentary on Saturday's announcement, the People's Bank of China attempted to assuage fears of a major strengthening of the yuan, also known as the renminbi, or "people's money."

"There is at present no basis for major fluctuation or change in the renminbi exchange rate," the bank said on its website.

Keeping the rate at a "reasonable, balanced level" would contribute to economic stability and help restructure the Chinese economy with greater emphasis on services and consumption, the statement said.

The yuan's value has been pegged to the U.S. dollar for two years, a major source of friction with countries who say the yuan is undervalued to China's own benefit. The bank's statement said it would rely more on a basket of currencies that includes the U.S. dollar to determine the exchange rate.

Chinese officials have long said reforms to the currency would be gradual. While no specific policy changes were mentioned, financial markets will be watched closely Monday for any effects.

President Barack Obama said China's move would help protect the economic recovery, while the European Commission said it would benefit "both the Chinese economy and the global economy."

The announcement, timed just before President Hu Jintao's trip to the G-20 summit in Toronto, Canada, follows warnings from Beijing last week against making its currency policies a main focus of the meeting. China has come under heavy pressure to reform from G-20 member countries, including South Africa and Brazil as well as the United States and those in Europe, who argue that the yuan is deliberately undervalued to keep Chinese exports unfairly cheap.

Industrial Bank economist Jiang Shu said the timing of the announcement marked an attempt to divert criticism of China at the meeting.

"It's a way of throwing out the carpet for the G-20, displaying again to international society the Chinese government's determination on the exchange rate issue," Jiang was quoted as saying on the website of the National Business Daily, a leading financial newspaper.

However, some Chinese experts and commenters on Internet message boards criticized the announcement as a cave-in to foreign pressure that would ultimately damage China's crucial export sector.