China’s yuan no longer undervalued as announced by IMF assessment completed on May 27 for 2015 Article IV review of the Chinese economy. The report is relevant in the light of significant appreciation seen in the last 12 months for the yuan and is the first such finding in more than a decade.
The IMF's First Deputy Managing Director, Mr. David Lipton, joined the final policy discussions and met with Vice Premier Ma Kai, People’s Bank of China Governor Zhou Xiaochuan, and China Securities Regulatory Commission Chairman Xiao Gang, among other senior officials. The mission made the following remarks: “China is transitioning to a new normal, aimed at safer and higher-quality—even if a bit slower—growth. A transition that is both challenging and necessary.”
“Growth in China is moderating, a slowdown that is not a goal onto itself but a by-product of moving the economy away from the unsustainable growth pattern of the past decade. We project China to grow at 6.8 percent this year, consistent with the authorities’ growth target of around 7 percent, and well within the 6½–7 percent range we consider appropriate for this year.”
The IMF has stated its confidence in China and the yuan being included in the Special Drawing Rights (SDR) basket . The SDR currently consists of 4 currencies:- the US dollar, the yen, the euro and the sterling. And China has actively moved for the IMF to include the yuan as an international trading currency. In response, the IMF said ”it is just a matter of time before the yuan is included but has insisted the currency must be first freely convertible.”