China Moves to Stabilize Currency, Retreating From Effort to Ease Control -<br />By KEITH BRADSHERMAY 26, 2017<br />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<br />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.<br />But longer term, the currency move signals that China is retreating from promises it made to the world in recent years<br />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.<br />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<br />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<br />Late Friday afternoon, however, the Chinese government said, in effect, “never mind.”<br />Chinese officials said they were “considering” a change in their procedures<br />that would reinforce their control of the currency, a turn of phrase that suggested the change had already been approved.<br />The move will essentially bring more short-term stability to China’s financial system, already the subject of renewed focus after<br />Moody’s Investors Service downgraded its credit rating on China’s bonds on Wednesday, citing the country’s mounting debt.<br />The China Foreign Exchange Trade System, which is controlled by the central bank, said it may change the way it sets<br />a value each morning around which the country’s currency, the renminbi, is allowed to fluctuate through the day.
