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People's Daily recently had an interview with Zhou Xiaochuan, governor of the People's Bank of China on the financial hot topics.

Whether there's any revaluation of the people's currency?

Reporter: recently we've learned of a voice in the world, holding that the people's currency should appreciate, so as to reduce the huge unfavorable balance in the trade for some developed countries, thereby alleviating the imbalance of the global economy. In the meanwhile, we also see the inflow of some capitals from oversea into China, pinning their hope on the revaluation of the people's currency. So I would like to ask whether there is any possibility after all for the exchange rate of the people's currency to appreciate?

Zhou: In regard of the exchange rate of the people's currency what we take into consideration is mainly such factors as the economy of the country and the balance of its international payment instead of the favorable or unfavorable balances in trade of one or two countries in the world.

In view of China's international payment we have some surpluses from certain constant items but not a considerable amount. At the same time we also have to carry out mechanism reform for the exchange rate of the people's currency, to improve continuously the mechanism in the forming of the exchange rate for people's currency so as to make China cater in a better way in the medium and long run to the new situation for opening up to the outside world and keep stable its finance.

Judging from China's international payment at present, the task in future is mainly centered on improving the mechanism in the shaping of the people's currency exchange rate rather than simply adjusting the exchange rate of it.

Is there any interest-rate rise this year?

Reporter: We saw the People's Bank of China announce the rise of the interest-rate for the people's currency on Oct.29, 2004. This has arrested the world attention. And so many people began to predict that China would from then on enter into a period of a ceaseless but minute "interest-raise period". Therefore, I would like to ask, will you again issue the news attracting the world attention this year as did last year?

Zhou: The Chinese economy is now on the track of shifting from a planned economy over to market economy and it will not display an obvious economic periodicity as does the matured market economy. In the countries of a matured market economy due to the relatively obvious cyclicity in economy the adjustment of the interest rate also indicates a periodic feature, i.e. to have interest-rate rise in one period and to reduce the rate in another. The cyclicity of the Chinese economy is not yet as stable as that and so we must not say that we've entered a certain period with regard to the interest rate. The central bank will pay close attention to and monitoring the changing situation of economy and finance, provide a timely analysis to the national economic situation and prices, the indexes for macro-economic control and on the basis decision will be made whether to raise the interest rate or not in the days to come.

What's your conception on the marketization reform of the interest-rate?

Reporter: Not long ago the central bank published a special report on the marketization of the interest rate. That is very eye-catching. And what's your conception on the marketization reform of the interest-rate in the days to come?

Zhou: In recent years the central bank has always been devoting to a stable progress for the reform of the interest rate marketization and especially in 2004 we made an important step forward in this regard. The 1st of January saw once again the floating space for the loan interest of financial organizations being widened and Oct.29 2004 witnessed the free rein given to the upper cap of loan rate and the lower limit of deposit rate for financial banking businesses.

After we've made these two big steps forward the recent goal for the interest rate marketization can be considered as already realized in so far as the marketization system is concerned and so there will not be more activities in this regard. Of course, the system marketization reform is one thing and the judgment of price and ability for price-setting by banking businesses themselves is another. It still requires a period of time for them to temper and develop themselves.

As to the lower limit of loan rate and the upper cap of deposit rate they will still be carried on for a fairly long period and consideration will be taken for the release when conditions are ripe. This is because they have something to do with the market competition order and the discrepancy of interest rate and some other factors. At a time when the financial and capital restrictions in certain banks are not yet strong enough it is likely to lead to improper competition in the market once the two limits are taken off.

How to reform the four state-owned banks?

Reporter: You've ever said that it won't take too long a time for the Bank of China and the Construction Bank of China to get listed. Could you give an explanation to what's the implication of "not take too long a time"? And is there any timetable for the reform of the Industrial and Commercial Bank of China and the Agricultural Bank of China?

Zhou: As to when and where the Bank of China and the Construction Bank of China get listed this depends on the decision of the boards of directors but it also depends on whether there is any suitable window for them in the capital market as well as the opinions for their financial advisors, major underwriters and accounting firms. What I said about the "not too long a time" for the Bank of China and the Construction Bank of China to get listed means that the two banks have basically reached the requirement in accordance with the major criteria in the capital market.

The reform of the Industrial and Commercial Bank of China and the Agricultural Bank of China is necessarily to be carried forward. Up to now, the leading group for the experimental reform of the solely state-owned banks into shareholding ones has already submitted to the State Council its overall plan for the financial reorganization of the Industrial and Commercial Bank and the share-holding reform work of the aforesaid bank will be carried out in accordance with the arrangement of the State Council when conditions come to mature.