text: 16 March 2010 05:56 [Source: ICIS news]
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  SINGAPORE (ICIS news)--China can import more volumes of petrochemical raw materials at less cost if it were to abandon the quasi-peg of the yuan to the US dollar and allow the Chinese currency to appreciate, analysts and industry sources said on Tuesday.
  But no amount of international pressure could force the Chinese authorities to embrace a freer exchange rate policy, as Premier Wen Jiabao made clear over the weekend, they said.
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  “The petrochemical industry itself would welcome the yuan appreciation but export-driven industries would be hit hard,” said an executive at China Huahai Oil, a stated-owned company engaged in oil and petrochemical trading.
  The country is a net importer of crude oil and raw chemicals, with import quantities continuously growing along with rising demand, analysts said.
  Its imports of acrylonitrile-butadiene-styrene (ABS) resins reached 2.16m tonnes last year, up 11% from 2008.
  The yuan-dollar was at CNY6.8263 on Tuesday, barely moving since the start of the year, based on data from the People’s Bank of China (PBoC).
  In 2009, the Chinese currency slipped 0.06% against the dollar after a 7.05% jump in 2008 and a 6.86% gain in 2007, based on data from Market News International (MNI).
  A stronger yuan would reduce the cost of production for companies that rely on imports for raw materials, analysts said.
  “This is obviously a cushion to inflation,” said Liu Qiyuan, chief economist at Shenzhen-based China Merchants Securities.
  But that would just be one part of the story.
  The petrochemical raw materials that it imports are used to manufacture end-products meant to be shipped out.
  Like most of its Asian neighbours,
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  “The government has to ensure a smooth transition … It takes a long time to change an economy from an export-driven one to a domestic demand-driven one,” Qiu added.
  With additional reporting by Judith Wang