Bank adviser in yuan warning
By Zhang Fengming |
00:00 UTC+8 April 9, 2010
|
Print Edition
Print Edition
A ONE-OFF and sharp appreciation of the yuan would harm the global economy, including consumers in the United States, Xia Bin, a central bank adviser said yesterday in Shanghai.
"The appreciation of the yuan isn't in the core interests of the US and won't solve its economic problems," Xia, a member of the monetary policy committee of the People's Bank of China, told the 2010 Halter Financial Summit.
He said China would stick to a managed flexible foreign exchange regime in the long haul but the yuan should be more flexibly traded.
China should peg to a basket of trade-weighted currencies in a few years, said Xia, who is also head of financial research at the State Council's Development Research Center.
He said that in the short term the currency policy should shift to the pre-crisis stance as soon as possible.
China depegged from the US dollar in 2005, and the local currency had appreciated about 20 percent until the middle of 2008 when the yuan's appreciation was halted - with yuan being flat against the greenback at 6.83 - as China tackled the world financial crisis.
China should open the yuan bond market to foreign investors, and Chinese companies should issue more yuan bonds offshore, Xia said.
China's finance ministry should issue more yuan bonds abroad and it should allow more yuan investment from overseas, he said.
He also called for expanding the cross-border trade yuan settlement trial nationwide to thrust the globalization of the yuan.
In July, Chinese mainland started allowing companies in Shanghai and four cities in Guangdong Province to use the yuan in cross-border trade with Hong Kong, Macau and members of the Association of Southeast Asian Nations.
Market speculation is mounting that the yuan will resume appreciation soon, with the third quarter as a possible timing.
There were tough disputes between the US and China on the currency issue in March. US Treasury Secretary Timothy Geithner said at the weekend that he was delaying an April 15 report on whether China manipulates its currency.
"The appreciation of the yuan isn't in the core interests of the US and won't solve its economic problems," Xia, a member of the monetary policy committee of the People's Bank of China, told the 2010 Halter Financial Summit.
He said China would stick to a managed flexible foreign exchange regime in the long haul but the yuan should be more flexibly traded.
China should peg to a basket of trade-weighted currencies in a few years, said Xia, who is also head of financial research at the State Council's Development Research Center.
He said that in the short term the currency policy should shift to the pre-crisis stance as soon as possible.
China depegged from the US dollar in 2005, and the local currency had appreciated about 20 percent until the middle of 2008 when the yuan's appreciation was halted - with yuan being flat against the greenback at 6.83 - as China tackled the world financial crisis.
China should open the yuan bond market to foreign investors, and Chinese companies should issue more yuan bonds offshore, Xia said.
China's finance ministry should issue more yuan bonds abroad and it should allow more yuan investment from overseas, he said.
He also called for expanding the cross-border trade yuan settlement trial nationwide to thrust the globalization of the yuan.
In July, Chinese mainland started allowing companies in Shanghai and four cities in Guangdong Province to use the yuan in cross-border trade with Hong Kong, Macau and members of the Association of Southeast Asian Nations.
Market speculation is mounting that the yuan will resume appreciation soon, with the third quarter as a possible timing.
There were tough disputes between the US and China on the currency issue in March. US Treasury Secretary Timothy Geithner said at the weekend that he was delaying an April 15 report on whether China manipulates its currency.
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