She said China had recognized that a flexible exchange rate was important for economic growth, hence the decision in 2005 to scrap its dollar peg and the widening on May 18 of the yuan's daily trading band against the dollar to plus or minus 0.5 percent from 0.3 percent.

The government was fully aware of the challenge posed by imbalances in the economy and was implementing a series of polices to tackle the problem, Wu said.

These included a more flexible exchange rate, adjustments to China's trade and foreign investment policies, tweaking taxes, resource pricing reform and environmental protection initiatives.

Other lessons from the crisis included the need for a healthy domestic financial system, the imperative of international cooperation and the capacity to deal with short-term capital flows.

"We should be alert to too much foreign capital chasing domestic assets," Wu said.

The importance of strong financial supervision had led to the establishment of China's banking and insurance regulatory agencies.

Beijing had also speeded up reform of its State-owned banks, including the sale of strategic stakes to foreign investors even though China was awash with foreign currency reserves and wary of more capital inflows, Wu said.

Similarly, the crisis showed the need for properly functioning financial markets, which China was successfully building up.

1

2

(For more biz stories, please visit Industry Updates)