Nobel laureate: Chinese economy not overheating ( 2003-11-07 08:50) (China Daily) China don't have to worry
about an overheated economy, said Nobel Prize laureate Robert Mundell in Zhuhai
on Thursday. Mundell spoke while attending the World Economic Developme nt
Declaration Conference (WEDDC) and was one of the drafters of the declaration.
China has seen a rapid growth of forex reserve this year leading to an
increasing money supply, with which the economy is labeled overheated, but this
is not a problem China has to worry about, he told the press at WEDDC, an
economic forum running from Thursday to Friday at a coastal resort in south
China's Guangdong Province.
The very slight inflation this year will counteract the deflation China had
last year and the currency expansion will lead to a growth of import to balance
China's export surplus, he said. This will adjust Chinese economy to a favorable
status, he added.
According to the People's Bank of China (PBOC), the broad money supply (M2)
increased 20.7 percent on a year-on-year basis in China by September this year
while the narrow money supply (M1) up 18.5 percent.
The fast growing forex reserve is pushed strongly by commercial banks rather
than overheated economy, Mundell said.
Those banks pour a huge amount of capital into China, predicting that the
country will appreciate its currency and, intend to cash in, he added.
The PBOC said China's forex reserve added by 97.5 billion US dollars in the
first nine months of this year, 51 billion US dollars more than that of last
year. By September, China's forex reserve totaled 383 billion US dollars.
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