China Moves to Stabilize Currency, Retreating From Effort to Ease Control -
By KEITH BRADSHERMAY 26, 2017
HONG KONG — China has made a big show of gradually loosening its grip on the value of its currency, an effort meant to mollify critics like President Trump
and experts both inside and outside the country who have long urged Beijing to let markets fix worsening financial problems in the world’s second-largest economy.
But longer term, the currency move signals that China is retreating from promises it made to the world in recent years
that it would open up its financial system — and many economists say China needs to open up its financial system if it wants to continue to grow at a healthy, sustainable pace.
China’s financial regulators generally do not announce they are considering a shift in something as essential as the value of the currency unless they have already
approved it, so the announcement on Friday was widely viewed as a signal to financial institutions, corporations and investors that change was on the way
Late Friday afternoon, however, the Chinese government said, in effect, “never mind.”
Chinese officials said they were “considering” a change in their procedures
that would reinforce their control of the currency, a turn of phrase that suggested the change had already been approved.
The move will essentially bring more short-term stability to China’s financial system, already the subject of renewed focus after
Moody’s Investors Service downgraded its credit rating on China’s bonds on Wednesday, citing the country’s mounting debt.
The China Foreign Exchange Trade System, which is controlled by the central bank, said it may change the way it sets
a value each morning around which the country’s currency, the renminbi, is allowed to fluctuate through the day.
