Concerns on RMB unfounded
( 2003-08-12 09:40) (eastday.com.cn)
Economists are calling for a rational evaluation of the Chinese currency renminbi amid an international debate on its true value, and pressure from some of China's trading partners who call for revaluing the currency.
Wei Jianing, a researcher from China's Development Research Center of the State Council, said concerns that the RMB was under-valued and having a negative influence on trade were unfounded.
"The RMB is not the major contri-butor to either worldwide deflation or sluggish exports of some industrial countries," Wei said.
There was no comparison with Japan in the mid-1980s before the appreciation of the Japanese Yen, when Japan's gross national product was 10 percent of the world total and the trade surplus was over US$100 billion, he said.
China's gross domestic product last year was just 3.28 percent of the world total and the trade surplus stood at US$30.4 billion, said Wei.
Chinese exports, produced using low-tech and labor-intensive manufacturing methods, accounted for only 4.3 percent of industrialized countries' consumption in 2001, and could not possibly cause world deflation.
Xiao Geng, professor from the School of Economics & Finance of University of Hongkong, described China's role in the world manufac-turing industry as a labor and market provider.
He said revaluation of the Chinese yuan would not benefit countries pressing for appreciation, because China's competitive export advantage was based on the "infinite supply of cheap labor rather than cheap currency."
Morgan Stanley global chief economist Steven Roach also predicted in May that China's exports would lose almost no market share if its currency appreciated 10 percent.
Lu Hongjun, president of the Shanghai Institute of International Finance, said appreciation pressure reflected the global strategies of some Western countries, especially the United States and Japan.
He said revaluation of the Chinese yuan would surely have a severe negative impact on the Chinese economy, harm the interests of domestic and overseas companies in China, and affect the develop-ment of neighboring countries and the whole world.
Recently, the Chinese govern-ment has said several times it would retain the stability of the RMB.
Wei suggested that the Chinese government should beware of international speculators, and seek the proper time to promote the reform of its foreign currency management system and adjust the exchange rate policy.
Many multinationals in China also want a stable Chinese currency.
Nick Swoden, director of procure-ment at Electrolux in Asia, said a stronger Chinese currency would lead to increases in procurement and investment costs.
Chinese raw materials were about 12 percent cheaper than those in Europe and America and the labor force was even less costly, he said.
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