Big rise in yuan set to impact Chinese exporters and jobs
Source: Agencies |
April 23, 2010, Friday
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Print Edition
Print Edition
A BIG rise in the yuan would badly hurt Chinese exporters and could lead to a rise in unemployment, the Ministry of Industry and Information Technology said yesterday.
Ministry spokesman Zhu Hongren was asked at a news conference yesterday whether China was conducting "stress tests" to judge how much currency appreciation exporters could cope with.
"We don't use the word 'stress test,' but as far as the possible impact of exchange rate movements on the economy is concerned, especially in labor-intensive sectors, we have always studied and analyzed the issue," he said. "For labor-intensive sectors, if the exchange rate fluctuates a lot, the impact will be huge."
The ministry is not in charge of currency policy, but is one of several powerful voices in the decision-making State Council, China's Cabinet.
Zhu said the light industry, textile, electronics and machinery sectors, which account for 70 percent of China's total exports and employ 70 million workers, were particularly vulnerable to a rise in the yuan.
Noting that 20 million migrant workers lost their jobs during the global financial crisis, Zhu said: "We are certainly not willing to see a situation like that again."
But he declined to say how much currency appreciation exporters could withstand.
"As to whether it's 3 percent, 5 percent, 7 percent or 10 percent, the answer will vary from sector to sector," Zhu said. "Even within the same sector, the answer will be different for different companies. That's why we don't want to give a single number."
The outlook for Chinese exporters was grim because of the risk of a double-dip in global growth, the ministry said in a statement distributed to reporters. It cited high unemployment in the United States, eurozone debt strains and rising trade protectionism among problems bedevilling the world economy.
Although exports were now growing again in annual terms, the situation remained "complicated," Zhu said.
In the same vein, he said a brisk rebound in industrial production was mainly due to massive government stimulus; underlying factory output had yet to recover to normal pre-crisis levels.
The pressure that some developed countries were exerting on China, including their demands for a stronger yuan, was weighing on Chinese trade, Zhu added.
Ministry spokesman Zhu Hongren was asked at a news conference yesterday whether China was conducting "stress tests" to judge how much currency appreciation exporters could cope with.
"We don't use the word 'stress test,' but as far as the possible impact of exchange rate movements on the economy is concerned, especially in labor-intensive sectors, we have always studied and analyzed the issue," he said. "For labor-intensive sectors, if the exchange rate fluctuates a lot, the impact will be huge."
The ministry is not in charge of currency policy, but is one of several powerful voices in the decision-making State Council, China's Cabinet.
Zhu said the light industry, textile, electronics and machinery sectors, which account for 70 percent of China's total exports and employ 70 million workers, were particularly vulnerable to a rise in the yuan.
Noting that 20 million migrant workers lost their jobs during the global financial crisis, Zhu said: "We are certainly not willing to see a situation like that again."
But he declined to say how much currency appreciation exporters could withstand.
"As to whether it's 3 percent, 5 percent, 7 percent or 10 percent, the answer will vary from sector to sector," Zhu said. "Even within the same sector, the answer will be different for different companies. That's why we don't want to give a single number."
The outlook for Chinese exporters was grim because of the risk of a double-dip in global growth, the ministry said in a statement distributed to reporters. It cited high unemployment in the United States, eurozone debt strains and rising trade protectionism among problems bedevilling the world economy.
Although exports were now growing again in annual terms, the situation remained "complicated," Zhu said.
In the same vein, he said a brisk rebound in industrial production was mainly due to massive government stimulus; underlying factory output had yet to recover to normal pre-crisis levels.
The pressure that some developed countries were exerting on China, including their demands for a stronger yuan, was weighing on Chinese trade, Zhu added.
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