Associated Press reported that China promised Wednesday to keep its exchange rate stable and said it would use part of its USD 1.95 trillion in foreign currency reserves to boost imports and consumer spending to combat the global financial crisis.

Mr Deng Xianhong deputy administrator of China's foreign exchange regulator said that "We will maintain the basic stability of the renminbi exchange rate at a reasonable and balanced level. The important thing is to prevent the exchange rate from making big fluctuations. This will not only be good for China and the world but also will be good for tackling the international financial crisis."

Mr Fang Shangpu another deputy administrator of the agency, the State Administration of Foreign Exchange said Beijing also is looking at how to use its foreign reserves in its effort to boost consumer spending and imports. He said "We will step up support for the government's policy of increasing imports and boosting domestic demand. He gave no details, but said the agency also will ease access to financing for "enterprises that are going to make outward investment."

Chinese exporters that face plunging sales want the yuan devalued, which would make their goods cheaper abroad. But economists say they see no sign Beijing will take such a step, which could fuel tensions with its trading partners.

Economists said weaker yuan would do little to boost Chinese exports because demand abroad is too weak. They say devaluation could cause serious repercussions, triggering a round of similar moves by other exporters and straining global trade relations at a time when coordinated action is needed to revive trade and finance flows.

The government's CNY 4 trillion stimulus plan is meant to shield China from the global slump by reducing reliance on exports through efforts to boost domestic consumption. It calls for injecting money into the economy through higher spending on public works in hopes it will make its way to consumers' pockets.

China's imports fell by 43% in January from a year earlier as demand for Chinese goods weakened and factories bought less foreign raw materials. It was a serious blow for the country's trading partners.

(Source: Associated Press)