Tags: China | Hu | Yuan | Policy

China Adviser: Hu's U.S. Visit Key for Yuan Policy

Friday, 02 Apr 2010 01:28 PM

 

Share:
  Comment  |
   Contact Us  |
  Print  
|  A   A  
  Copy Shortlink
A successful visit by Chinese President Hu Jintao to Washington this month could open the door for an adjustment in China's yuan policy, but another one-off revaluation should be avoided, a central bank adviser said on Friday.

"The adjustment should be carried out at a time that is appropriate. We need to find the right time, but a one-off adjustment won't benefit either China or United States," Li Daokui, a member of the central bank's monetary policy committee, told Reuters in an interview.

"It will hinge on President Hu's visit to the United States. If the talks are successful, we could made an adjustment based on China's own conditions," he said, without elaborating.

Hu will attend a nuclear security summit in Washington on April 12-13, despite initial uncertainties about whether he would go.

The nuclear summit will open days before the U.S. Treasury is due to release a report on whether China is distorting its currency exchange rate to boost its exports.

Domestic U.S. political pressure has been building on Treasury to label China a "currency manipulator" in its April 15 report on global currency policies, but analysts believe Hu's decision to proceed with the trip is an indication that it will not do so.

China has been facing stiff pressure from the United States and other Western powers which say Beijing is keeping its currency artificially low to give Chinese exporters an advantage in world trade.

Beijing allowed the yuan to rise 21 percent against the U.S. dollar between July 2005 and July 2008 before effectively repegging the currency, also known as the renminbi, near 6.83 to the dollar to help the economy through the global financial crisis.

The yuan issue has been politicized by some foreign countries, but Hu's planned visit signaled easing tensions which could remove a barrier for China carrying out currency reforms, Li said.

Asked about when the People's Bank of China (PBOC) will consider raising interest rates, Li said it would hinge on upcoming economic data, particularly March figures due to be released soon.

The PBOC has already taken some smaller steps this year to prevent the surging economy from overheating, such as raising banks' reserve requirements, and strong data recently has provided fresh arguments for more tightening sooner rather than later.

"The situation is very complicated this year," said Li, an influential economist at Beijing's elite Tsinghua University who was recently appointed one of three academic advisers to the central bank.

Worries about Chinese policy tightening have spooked financial markets in recent months as China has largely led the global economic recovery.

China will be able to sustain strong economic growth in the next few years and the government's focus is controlling inflation expectations and asset price bubbles, Li said.

Public expectations on consumer prices would be crucial for the government to maintain a lid on inflation, he said.

Some analysts say inflation is set to accelerate this year given the ample liquidity in the banking system and huge bank loans.

Although the consumer price index rose only 2.7 percent in the year to February, surging property prices are a harbinger of broader inflation in an economy that is likely to record year-on-year GDP for the first quarter well into double digits.

"High liquidity alone won't be enough to push up inflation, but liquidity in conjunction with rising asset prices and inflation expectations will lead to higher inflation," said Li, a Harvard-trained economist.

© 2014 Thomson/Reuters. All rights reserved.

Share:
  Comment  |
   Contact Us  |
  Print  
  Copy Shortlink
Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Retype Email:
Country
Zip Code:
Privacy: We never share your email.
 
Hot Topics
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
Top Stories
You May Also Like

Low-Carb Diet Beats Low-Fat for Weight Loss: Study

Monday, 01 Sep 2014 21:26 PM

Alow-carbohydrate diet is better for losing weight and may also be better for lowering the risk of heart disease than a  . . .

NYPD's Bratton Defends Response in Custody Death

Monday, 01 Sep 2014 19:48 PM

It appears New York City police officers behaved appropriately when they put a protective body wrap on drug user who lat . . .

Fast-Food Workers Seeking Raises Plan Strike in 150 Cities

Monday, 01 Sep 2014 19:42 PM

Fast-food workers in 150 U.S. cities plan to protest this week in what could be the largest strike since the demonstrati . . .

Most Commented

Newsmax, Moneynews, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, NewsmaxWorld, NewsmaxHealth, are trademarks of Newsmax Media, Inc.

 
NEWSMAX.COM
America's News Page
©  Newsmax Media, Inc.
All Rights Reserved