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Too early to say lower yuan lifts exports
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A senior official at the Organization for Economic Cooperation and Development said yesterday that it was too early to interpret China’s recent yuan devaluations as an attempt to boost exports to drive economic growth.
OECD Deputy Secretary-General Rintaro Tamaki, speaking at a news conference in Tokyo, said the scope of the devaluations was rather small to be aimed at the promotion of exports.
A weaker yuan boosts the cost of imports, which could offset any benefits from a rise in exports, given China’s economic structure, said Tamaki, a former top currency official at Japan’s Ministry of Finance.
“In Japan too, a weak yen benefits exporters but causes losses to importing companies. In that sense, it’s not easy for currencies alone to work magic to drive exports all at once.
“It’s premature to think that action, taken to let the yuan move more in line with the market, was aimed at bringing China back to being an export-driven economy,” he said.
China is headed for its slowest economic growth in 25 years in 2015 and mainland markets have dived 40 percent since mid-June, sending global financial markets into a tailspin.
Rather than being wary about slowing growth, attention should be paid to whether China can carry out structural reform to achieve stable and sustainable economic growth, Tamaki said.
“It would be more worrisome if China continues at an 11 percent pace of growth,” he said. “China’s struggle or shift of its economy is in a sense in line with the direction” toward an economy geared to consumption and domestic demand.
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