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Last Updated: Wednesday, 13 October, 2004, 06:59 GMT 07:59 UK
Yuan adjustment talk 'groundless'
Chinese banknotes
The US is leading the call for yuan revaluation
China's authorities have ruled out any upward revaluation of the yuan in the near future, squashing rumours in Chinese financial markets.

The rumours were "groundless" and a misunderstanding" of China's exchange rate policy, the State Administration of Foreign Exchange (SAFE) said.

The revaluation rumours grew after Chinese officials told G7 leaders this month that reforms were progressing.

The G7 group of wealthy nations is concerned over cheap Chinese exports.

The yuan is currently set at 8.28 to the dollar.


US politicians and industrialists have complained that an unfairly-low Chinese currency is destroying US manufacturing jobs.

Meanwhile, the G7 and International Monetary Fund are worried that any upsets to China's economic stability could hurt the world economy, given its growing importance in driving global growth.

Earlier this month, China was invited to attend the G7 club of rich industrial nations' meeting for the first time.

Ahead of that gathering, US Treasury secretary John Snow and Federal Reserve chairman Alan Greenspan held a meeting with their Chinese counterparts, Jin Renqing and Zhou Xiaochuan in Washington.

They issued a joint statement in which China reaffirmed its "commitment to further advance reform and to push ahead firmly and steadily to a market-based flexible exchange rate".

Chinese leaders have issued several such assurances before, always combined with the insistence that change is not imminent. Revaluation depends on curbing runaway growth, and reforming the banking sector, they say.

Tax blow

Meanwhile, China's steps to cool the economy have cut growth in tax revenue for the June-to-September period.

Tax revenue grew by 25.8% in the third quarter of 2004, down from 26.9% in the second quarter, the State Administration of Taxation (SAT) said.

Growth in sales tax from sectors like steel and construction materials, which have been ordered to curb expansion, was halved.

Growth in sales tax on building materials was 24%, down from 40% in the second quarter, and 50% in the first quarter, the official media reported.

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