Beijing will not allow RMB to appreciate By Ma Wei (China Daily HK Edition) Updated: 2005-01-15 15:47
The central government will not allow the renminbi to appreciate this year,
as the market is highly speculative on the revaluation of the currency.
Fan Gang, director of the National Economic Research Institute China Reform
Foundation, said this yesterday.
![A Chinese bank clerk counts 100-yuan renminbi bank notes in this undated file photo. Fan Gang, director of the National Economic Research Institute China Reform Foundation, said the government will not allow the renminbi to appreciate this year, as the market is highly speculative on the revaluation of the currency. [newsphoto/file]](xin_3901021516038513002823.jpg) A Chinese bank
clerk counts 100-yuan renminbi bank notes in this undated file photo. Fan
Gang, director of the National Economic Research Institute China Reform
Foundation, said the government will not allow the renminbi to appreciate
this year, as the market is highly speculative on the revaluation of the
currency. [newsphoto/file] | If Beijing allows the
renminbi to appreciate in such a market environment, the exchange rate of the
currency will see even greater fluctuation, Fan said at a seminar on economic
outlook held by MasterCard International in Hong Kong.
Meanwhile, Fan stressed that renminbi revaluation must choose an appropriate
time because it is a very sensitive issue, which could bring unemployment shocks
that are very hard to deal with on the mainland. Fan said that speculation on
renminbi revaluation is very risky and dangerous and as long as the speculation
money stays in the market, the central government will not consider the
revaluation issue.
In addition, Fan noted that 5 per cent inflation for the mainland last year
and an expected 4-5 per cent inflation this year, or a total of about 10 per
cent increase in consumer prices, would have actually led to the appreciation of
the renminbi.
The rise of interest rates in the US this year will also ease the
appreciation pressure on the renminbi, Fan added.
In the long run,renminbi should be pegged with a basket of currencies because
the exchange rate of the US dollar is very unstable, suggested Fan.
Yuwa Hedrick Wong, MasterCard's economic adviser for Asia-Pacific, estimated
that the economy of the mainland will remain active this year and will drive
economic growth in the Asia-Pacific region.
Wong said that because of the complexity of variables in the Asia-Pacific
region as well as the whole world, the global economy will meet new
uncertainties and complexities, such as greater fluctuation of the US dollar,
continuous inflation and consequent rise of interest rates.
Wong believes that the US dollar will see greater fluctuation this year, with
a range of 10-20 per cent, and the mainland government will keep raising
interest rates.
Furthermore, MasterCard International suggested that as consumer confidence
and employment in Hong Kong improves, the stock and property markets rebound,
and deflation comes to an end, development in Hong Kong should remain
optimistic.
At the same time, the inflow of mainland tourists and capital will drive Hong
Kong's economic growth in 2005.
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