About Revaluation of RMB
On the 2004-02-27 China Daily, there is an editorial titled "RMB revaluation unhelpful to US unemployment: Greenspan". "cRevaluation of the Renminbi (RMB) will be of no help to America's unemployment problem, Alan Greenspan, the "economy steersman" said twice in a short period of two monthscFederal Reserve Chairman Alan Greenspan testified to the US Congress on February 11 that attempts to restrict Chinese commodities would offer no help to solving America's unemployment problem. This is his second remark on a China issue in two months, which served as a best dose of sobriety to those clamoring for RMB appreciation.hEconomists are calling for a rational evaluation of the Chinese yuan (RMB) currency amid an international debate on its true value, and pressure from some of China's trading partners for the government to revalue the currency. From last year, there has been growing voice for the RMB's appreciation in the Western world where some people see China's balance of payments surplus on both current and capital accounts, and the country's rapid increase in foreign exchange reserve. On the contrary, a fact is that the falling US dollar has resulted in the depreciation of RMB, which is pe
If the government decides to appreciate the yuan, it will once again give economic development a tremendous setback. During that period, the broader money supply grew more than 18. '' Now, China is gradually opening its capital account. China can try to make up losses in foreign trade by seeking more foreign direct investments (FDI). It also allows for greater leeway to hike domestic prices, which can help ease deflationary pressure. The central bank has to buy hard currency on the foreign exchange market to keep the yuan, or RMB, stable, raising money supply and fueling fears of inflation. Besides it might harm Chinafs economy in different way, and even worsen the global economy. At that time, the band of movement for the exchange rate began to narrow. But judging from the global economic climate, China should continue pegging the RMB to the US dollar - and should brush aside pressure to revalue the currency. The prospect of huge job cuts to be caused by a RMB revaluation is something China cannot afford. With the world economy still suffering from deflation, it is still unknown whether the CPI in China will continue to pick up in the second half of this year. 9 per cent, the largest drop in 17 months. The average Chinese worker in the manufacturing sector earns US$1,100 a year, which is about 3.
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