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BEIJING -- China's central-bank chief, Zhou Xiaochuan, said the country's foreign-exchange changes will progress steadily, with the central bank intervening less in the foreign-exchange market.

The remarks come just days before Chinese President Hu Jintao and U.S. President George W. Bush are to meet in New York, where currency issues are expected to be discussed.

At the same time, Mr. Zhou, governor of the People's Bank of China, said China doesn't want fluctuations in world financial markets to be caused "by our active composition adjustment of the foreign reserves."

"We will not take any imprudent actions in this regard," Mr. Zhou said. China's foreign-exchange reserves are the second-largest in the world after Japan's, and stood at $711 billion at the end of June. Much of the reserves are invested in U.S. Treasurys.

China's changes to its exchange-rate regime are intended to ease external trade imbalances, boost domestic demand and raise the competitiveness of local companies, Mr. Zhou said in an interview with the Financial News on the sidelines of a central-bank conference in Canada. His remarks to the central-bank-backed Financial News were posted during the weekend on the central bank's Web site.

China's managed floating exchange-rate regime allows the central bank "to act as a filter, doing nothing with the normal fluctuations, but smoothing out the abnormal movements including excessively large or too-frequent changes" in the exchange rate, Mr. Zhou said.

"Such a role of the central bank is adaptive in nature, and may be reduced over time, as the economy gets more resilient to shocks," Mr. Zhou said. He added that the central bank will reduce its purchases of foreign exchange in the market, while companies will keep more foreign exchange.

He also said the central bank will keep to a gradualist approach as it pushes ahead on its foreign-exchange restructuring, but the conditions for adopting a freely floating exchange-rate regime haven't been met.

China isn't well prepared to deal with the possibility of any "sharp and disorderly" adjustments in the global economy, he said.

Mr. Zhou said China's macroeconomic environment is conducive to exchange-rate changes. He said China's consumer-price-index growth is moderate, and that rising interest rates in the U.S. are "an important condition" for yuan exchange-rate changes.

On July 21, China scrapped its policy of effectively pegging the yuan to the dollar. Instead, it revalued the yuan 2.1% against the dollar and started referencing its value to a basket of currencies.

In recent days, central-bank officials have given cautiously optimistic assessments of the July move, but suggested a further official revaluation of the yuan is unlikely in coming months and that the role of market supply and demand is an important factor in setting the exchange rate.

Analysts say the degree of revaluation isn't enough to have any effect on China's ballooning current-account surplus, namely in trade. Critics, especially those in the U.S., have argued the yuan is undervalued and China should do more to allow it to appreciate.

China wants equilibrium in its balance of payments, and statistics in this regard could be improved, Mr. Zhou said, suggesting a possible revision in the calculation for current account that would be composed mainly of transactions of trade in goods and services.

He said that at present the current account also includes items for proceeds and current transfers, which aren't stable and can be distorted by changes in currency-appreciation expectations.

Meanwhile, to complement the foreign-exchange changes, China's insurance regulator issued guidelines during the weekend allowing insurance funds to put money in overseas foreign-exchange investments.

Participants entrusted with insurance funds will be able to conditionally invest in foreign-currency products, overseas shares of Chinese companies and bonds issued by foreign governments, including mortgage-backed securities guaranteed by the government, as well as money-market funds and structured deposits, the China Insurance Regulatory Commission said. The guidelines take effect immediately.

Among the key investments, participants entrusted with insurance funds will be able to invest in foreign-currency products denominated in nine currencies, including the U.S. dollar, euro, Japanese yen, U.K. pound, Canadian dollar, Swiss franc, Australian dollar, Singapore dollar and the Hong Kong dollar, the guidelines said. Products outside of the nine currencies could be approved separately by the regulatory commission, the guidelines said.