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Conduct of forex and global yuan mooted
By Louise Ho |
November 17, 2011, Thursday
|
Print Edition
Print Edition
CHINA should improve management of its foreign exchange reserves and accelerate the internationalization of the yuan, speakers at a financial forum said in Shanghai yesterday.
Speakers at the forum, organized by the Chinese website of the Financial Times, urged China to better manage its huge forex reserves of US$3.2 trillion as of September, the largest in the world.
Economist Hu Zuliu said China should reform its forex system and review the investment returns from its forex investments.
"The present management system is not the best or most responsive," Hu said. "It's time to consider introducing an accountability system (for the forex reserves)." He didn't elaborate.
He projected that an increase in investment returns by 1 percent could help the 10 poorest provinces in China not pay tax for a year. A 2 percent rise can take care of China's medical expenditure, and a 3 percent increase in returns can help solve problems in the country's education and environmental protection, he said.
Jing Ulrich, managing director of China equities and commodities at JPMorgan, said China should use the forex reserves to buy more commodities, such as oil, as she predicts the value of paper currency to depreciate in the next few years.
Speakers at the forum, which discussed structural challenges faced by China amid the global economic uncertainties, also said China should accelerate the pace to internationalize the yuan especially when the US dollar and the euro are facing a crisis.
"We should not internationalize the yuan at whatever the costs but we can create conditions to encourage the currency's internationalization," said Fang Xinghai, head of the Shanghai Financial Services Office.
Speakers at the forum, organized by the Chinese website of the Financial Times, urged China to better manage its huge forex reserves of US$3.2 trillion as of September, the largest in the world.
Economist Hu Zuliu said China should reform its forex system and review the investment returns from its forex investments.
"The present management system is not the best or most responsive," Hu said. "It's time to consider introducing an accountability system (for the forex reserves)." He didn't elaborate.
He projected that an increase in investment returns by 1 percent could help the 10 poorest provinces in China not pay tax for a year. A 2 percent rise can take care of China's medical expenditure, and a 3 percent increase in returns can help solve problems in the country's education and environmental protection, he said.
Jing Ulrich, managing director of China equities and commodities at JPMorgan, said China should use the forex reserves to buy more commodities, such as oil, as she predicts the value of paper currency to depreciate in the next few years.
Speakers at the forum, which discussed structural challenges faced by China amid the global economic uncertainties, also said China should accelerate the pace to internationalize the yuan especially when the US dollar and the euro are facing a crisis.
"We should not internationalize the yuan at whatever the costs but we can create conditions to encourage the currency's internationalization," said Fang Xinghai, head of the Shanghai Financial Services Office.
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