Tags: Roubini Stronger Yuan is Good for China

Roubini: Stronger Yuan is Good for China

Tuesday, 05 Oct 2010 08:02 AM

China should strengthen its currency, the yuan, not because the United States wants the Asian giant to do so but because a stronger currency would expand the Chinese economy, says New York University economist Nouriel Roubini.

Washington argues that Beijing is keeping its currency artificially cheap to give it an unfair trade advantage.

For Roubini, China should bolster its currency not because Washington says so but because a stronger yuan would increase domestic demand by giving households more power to buy imported goods, according to The Wall Street Journal.

While a cheap yuan makes Chinese exports more competitive, in the long run, more domestic demand is better.

Exports would slip with a stronger currency, yet “the real income of households is going to increase, and they're going to consume more. You export less and you consume more,” Roubini says.

Chinese consumption as a percentage of gross domestic product has dropped to 36 percent from 45 percent in the last ten years, compared with U.S. levels of about 70 percent, the newspaper reports.

The U.S. House of Representatives recently approved legislation that would penalize China for keeping the yuan — also called the renminbi — at levels Washington deems unfair, a move Beijing says will hurt ties between the two economic giants.

“Using the renminbi exchange rate issue as an excuse to engage in trade protectionism against China can only harm China-U.S. trade and economic relations, and will have a negative effect on both countries’ economies and the world economy,” says Chinese Foreign Ministry spokeswoman Jiang Yu, according to Reuters.

© 2017 Newsmax Finance. All rights reserved.

1Like our page
2Share
StreetTalk
China should strengthen its currency, the yuan, not because the United States wants the Asian giant to do so but because a stronger currency would expand the Chinese economy, says New York University economist Nouriel Roubini. Washington argues that Beijing is keeping its...
Roubini Stronger Yuan is Good for China
257
2010-02-05
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved