BOAO, Hainan, April 24 (Xinhua) -- China has no time schedule for reform of its foreign exchange mechanism, said Wei Benhua, deputy director of the State Administration of Foreign Exchange Sunday.

   Wei made the remarks in responding of rumors that China would loosen the RMB in the second half of this year or the first half of next year. He said, "China has no time schedule for the reform. "

   China's yuan has been pegged at 8.3 to a dollar for the past 10 years and foreign governments have been pressuring China to move towards a more flexible exchange rate.

   The Chinese government and economic departments attach great importance to the reform of foreign exchange mechanism, but as part of the macro-economic policy, it cannot be changed radically, Wei said.

   "I cannot decide a proper time until the basic conditions mature," Wei said.

   As a member of the World Trade Organization, China promised to open its financial market to foreign banks. Chinese banks, including the central bank and the commercial banks, should learn how to compete, said Wei.

   The most urgent issue in the financial sector now is to enhance corporate governance among Chinese banks, said Wei.

   Chinese companies engaged in foreign trade have being operating for a long time under the pegged currency regime. They need some time to learn how to deal with risks under a flexible mechanism, Wei said.

   The financial system should be improved along with it, he said.

   A flexible currency mechanism requires an open capital account and mature foreign exchange market, which China is far from having, Wei said. Enditem