The International Monetary Fund is calling on China to undertake a series of reforms of its financial system, including loosening controls on its currency.
The Washington-based institution said Wednesday the yuan, also known as the renminbi, is “substantially” undervalued even though China has allowed it to gradually appreciate against the U.S. dollar since last year. It said the currency’s appropriate value is between three and 23 percent higher than at present.
Lawmakers in the United States have accused Beijing of intentionally undervaluing its yuan to give Chinese exporters an unfair advantage on the global market.
The IMF report says China must carefully embark on a set of complex reforms to move from an export-driven economy to one that is consumer-driven. It says that would reduce the potential for China to cause “shocks” to the global economy.
He Jianxiong, China’s representative at the IMF, said the Fund’s current assessment “ignores the trend exchange-rate movement” as well as planned reforms that will be implemented in the medium-term.