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BIZCHINA / News |
Economist urges quicker yuan rise(Shenzhen Daily)
Updated: 2007-07-30 08:36 The government should allow the yuan to appreciate to a suitable level in a short period of time to dampen speculative capital inflows betting on stable and long-term yuan gains, a prominent government economist said Saturday. The government has adopted a gradual approach to yuan appreciation to cushion the shock to banks and exporters since it revalued the yuan by 2.1 percent to 8.11 yuan per U.S. dollar in July 2005. The yuan has now appreciated a further 7.2 percent. But market expectations for a stable and predictable yuan rise make it very difficult for authorities to curb inflows of hot money, said Xia Bin, a senior economist working at the Development Research Center under the State Council. “The government should, based on the requirements of China’s development, calculate how much the yuan should be raised in these couple of years and then appreciate the yuan by that margin in a short time,” he told a forum. Xia said the pace of appreciation should be unpredictable, leaving little chance for speculators to take advantage of it. Exactly how much hot money is finding its way illicitly into China is not known, but most analysts gauge the size of such inflows by subtracting China’s trade surplus and foreign direct investment from the rise in its forex reserves.
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