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Economists expect China to allow faster yuan rise in 2011
By Zhang Fengming |
December 20, 2010, Monday
|
Online Edition
Online Edition
CHINA will maintain its stance on a gradual appreciation of the Chinese yuan next year, but the rising pace may be faster than this year as the government acts to counter inflation, economists said today.
Managing the pace of the yuan's appreciation will be one of the major challenges for policy makers next year, said Liao Qun, chief economist of CITIC Bank International Ltd.
"While mindful of the appeals of foreign trading partners, based on China's economic realities, the central government was likely to stick with its gradualist approach to yuan appreciation," Liao said.
However, the US and other western countries keep requesting that the yuan value appreciate faster and by a bigger margin, while the United States' new round of quantitative easing, or QE2, is generating new market pressure to force China to comply with this request, he added.
Liao said he expects the pace of yuan appreciation to be faster than the previous forecast of 3 percent to 5 percent. It is likely to gain 4 percent to 6 percent against the US dollar in 2011, he said.
Stephen Green, head of research at Standard Chartered Bank China, also said he expected a 6 percent appreciation of the yuan next year.
"The real interest rate is too low," Green said. "A faster appreciation of the yuan could help counter the rise of inflation."
The Consumer Price Index, the main gauge of inflation, rose 5.1 percent in November, the fastest pace in 28 months. Food prices jumped 11.7 percent last month, also the most since July 2008.
Managing the pace of the yuan's appreciation will be one of the major challenges for policy makers next year, said Liao Qun, chief economist of CITIC Bank International Ltd.
"While mindful of the appeals of foreign trading partners, based on China's economic realities, the central government was likely to stick with its gradualist approach to yuan appreciation," Liao said.
However, the US and other western countries keep requesting that the yuan value appreciate faster and by a bigger margin, while the United States' new round of quantitative easing, or QE2, is generating new market pressure to force China to comply with this request, he added.
Liao said he expects the pace of yuan appreciation to be faster than the previous forecast of 3 percent to 5 percent. It is likely to gain 4 percent to 6 percent against the US dollar in 2011, he said.
Stephen Green, head of research at Standard Chartered Bank China, also said he expected a 6 percent appreciation of the yuan next year.
"The real interest rate is too low," Green said. "A faster appreciation of the yuan could help counter the rise of inflation."
The Consumer Price Index, the main gauge of inflation, rose 5.1 percent in November, the fastest pace in 28 months. Food prices jumped 11.7 percent last month, also the most since July 2008.
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