by Calculated Risk on 3/06/2010 09:08:00 AM

A few quotes:

From Dow Jones: Zhou Signals Yuan Policy Shift

"We don't rule out that during some special periods--such as the Asian Financial crisis and the global financial crisis this time--we adopted special policies, including a special exchange rate mechanism," [China central bank Gov. Zhou Xiaochuan] said at a news briefing during the annual session of the legislature, the National People's Congress.

"Sooner or later, we will exit the policies," he said

Bloomberg: Zhou Says China Should Be ‘Very Cautious’ in Crisis Exit

“We must be very cautious about the timing of normalizing the policies, and this includes the renminbi rate policy,” Zhou said at a press briefing in Beijing today, using another term for the Chinese currency. A global recovery “isn’t solid,” he said.

From Reuters: Days of "special" yuan policy numbered-China c.banker

"Practice has shown that these policies have been positive, contributing to the recovery of both our country's economy and the global economy," Zhou told a news conference.

But he added: "The problem of how to exit from these policies arises sooner or later."
...
"If we are to exit from these irregular policies and return to ordinary economic policies, we must be extremely prudent about our choice of timing. This also includes the renminbi exchange rate policy," he added.
...
Zhou was speaking after the bank issued a statement reaffirming a pledge made a day earlier by Premier Wen Jiabao to keep the yuan "basically stable" in 2010.

"Basically stable" probably gives some room for appreciation of the yuan.

China had been letting the yuan appreciate slowly, but pegged the yuan to the dollar when the financial crisis started. This has helped China recover, but the fixed exchange rate is a key issue that needs to be resolved.