Zhou Xiaochuan Said Gradual Appreciation Of RMB

Beijing time on the morning of October 9th,

"China's exchange rate policy is gradually moving to a balance point based on the supply and demand of the market," Zhou Xiaochuan said at a seminar held by Broadcasting British Corporation today at the IMF annual meeting. "We are carrying out monetary reform in a step-by-step way instead of adopting the so-called shock therapy."

Since June, China's RMB dollar exchange rate has increased by 2%. Foreign governments believe that China's exchange rate is too slow, accusing China of artificially lowering the currency exchange rate to gain export advantage.

At the annual meeting of IMF, finance ministers accused China, Brazil and Japan of pursuing a weaker currency that would damage the world economy.

"For large economies, gradualism is beneficial," Zhou said. "Otherwise, it will damage the economy."

The US House of Representatives passed a measure last month to give American companies the power to supervise import tariffs to prevent Chinese manufacturers from using exchange rate as a means of trade competition.

Terry, President of the European Central Bank, said that "since the beginning of the appreciation of the renminbi in June this year, it has not been in the way we want to see."

Chinese Premier Wen Jiabao warned EU leaders in Brussels this week not to join the US force to put pressure on China's exchange rate reform.

Wen Jiabao said that an excessive currency appreciation would result in a large number of bankruptcies of Chinese export enterprises, resulting in social upheaval in China.

When it comes to China's monetary and fiscal policies, Zhou Xiaochuan said that during the global financial crisis, policymakers will "scrutiny" every economic stimulus plan to avoid potential threats to inflation and asset bubbles.

Data showed that China's manufacturing expansion in September was the fastest in four years, while consumer prices rose 3.5% in September, the biggest increase in 22 months.