Yuan rise could worsen China's imbalance: central banker

BEIJING Mon Sep 27, 2010 8:28am EDT

BEIJING (Reuters) - A rise in the value of the yuan may intensify expectations for further increases and could lead to a worsening of China's international payments imbalance, a regional central bank official said in comments published on Monday.

The comments by Xu Nuojin, deputy head of the People's Bank of China (PBOC) Guangzhou, were published in the Financial News, a paper run by the central bank, and come amid growing pressure from Washington for faster yuan appreciation.

"Any efforts to address the international payments balance by adjusting the yuan exchange rate will achieve no results," Xu wrote in an opinion piece.

He did not elaborate on the currency issue, but he added that China has to boost consumption and investment to address the problem of high savings levels in the Chinese economy.

Many Chinese economists and officials, like Xu, have reiterated their view that the yuan, also known as the renminbi, is not undervalued and should not be blamed for China's trade and economic imbalances.

(Reporting by Zhou Xin and Kevin Yao; Editing by Ken Wills)

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Comments (4)
axiom321 wrote:
Definitely the Chinese are hooked to the American consumer. One way or another at some point America has to manufacture their own products and services. This situation can’t go forever and this is the time to stop it.

Prices has to reflect productivity levels so supercheap prices means super productivity and that is not the case for China. So that is the currency manipulation.

Sep 26, 2010 10:47pm EDT  --  Report as abuse
Dwight_Jones wrote:
The US must devalue, that is where confidence has been lost. The race to devalue will also be contested by the Euro and Yen.

Sep 26, 2010 11:20pm EDT  --  Report as abuse
MaiO wrote:
In a BBC interview with Cheng Siwei on HardTalk “the Chinese saves today spending for tomorrow. The US spends tomorrow saving today”.

The Chinese are good at saving money, but this would hurt their economy if they don’t have US consumers who spends like crazy. Both side needs balance.

Sep 26, 2010 11:32pm EDT  --  Report as abuse
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