China will look at revaluing its currency when global partners begin to withdraw their stimulus packages, a top Chinese central banker said on Saturday.
However, Zhu Min (朱民), deputy governor of China’s central bank said revaluation would not fix world trade imbalances.
He told the World Economic Forum in Davos that China is trying to raise domestic consumption, but warned it would take time to get thrifty Chinese to spend more.
Zhu said Beijing is committed to the G20 Pittsburgh summit agreement that countries will coordinate exit strategies from their massive stimulus packages adopted to combat the global downturn.
“If global [partners are] ready to do exit strategy, China is ready ... including various issues — liquidity issue, exchange issue,” he told the forum.
China has been under fire for keeping the yuan weak against the dollar. Critics say this keeps Chinese exports artificially cheap and has fueled a massive trade surplus with the West. China’s trade surplus reached US$196.1 billion last year.
Zhu said a stronger yuan would not solve trade imbalances.
“Exchange rate is an issue within this rebalancing issue. Exchange rate will not be able to change the whole thing,” he said.
Zhu said Beijing recognizes the need to wean itself from dependence on exports.
“The crisis tells us that a purely export model is not sustainable and we’re working on it,” he said. “Things have improved, but it takes time.”
“I’m still an old fashioned person. If the glass is OK, I’m not going to throw it away to buy a crystal one even if my income increases. I’ll still use it,” he said.
IMF managing director Dominique Strauss-Kahn also noted that it is “very difficult to shift this growth model” from export-led to a more domestic-led one.
With US consumers buying less amid the crisis and China spending on a stimulus and trying to get Chinese to buy more, the problem of trade imbalances is “looking a little better than before crisis,” Strauss-Kahn said.
But he warned that Chinese consumers are far from able to offset lower US consumption.
In a separate session, Standard Chartered bank’s group chief executive Peter Sands said there was no quick fix to China’s currency dilemma.
“I think there [are] a lot of simplistic things said about the renminbi. Some seem to believe that if it were revalued, all the macroeconomic imbalances will disappear instantly. That’s just wrong. It’s far too simplistic,” he said.
He pointed out that the value of Asian economies has increased, and that “value is going to be reflected in the way Asian currencies are valued relative to the Western” currencies.
“I believe that over time, the renminbi and other Asian currencies will get more valuable and managing that in an orderly way is important to reconciling some of the macro-economic imbalances in the world,” he said.
French President Nicolas Sarkozy and billionaire financier George Soros made prominent calls during the Davos meeting for China to allow its currency to appreciate.
In a keynote speech on the first day of the forum, Sarkozy made a veiled attack against China, saying festering trade imbalances were harming economic recovery.
“Exchange rate instability and the under-valuation of certain currencies militate against fair trade and honest competition,” he said.
When Lika Megreladze was a child, life in her native western Georgian region of Guria revolved around tea. Her mother worked for decades as a scientist at the Soviet Union’s Institute of Tea and Subtropical Crops in the village of Anaseuli, Georgia, perfecting cultivation methods for a Georgian tea industry that supplied the bulk of the vast communist state’s brews. “When I was a child, this was only my mum’s workplace. Only later I realized that it was something big,” she said. Now, the institute lies abandoned. Yellowed papers are strewn around its decaying corridors, and a statue of Soviet founder Vladimir Lenin
ELECTRONICS BOOST: A predicted surge in exports would likely be driven by ICT products, exports of which have soared 84.7 percent from a year earlier, DBS said DBS Bank Ltd (星展銀行) yesterday raised its GDP growth forecast for Taiwan this year to 4 percent from 3 percent, citing robust demand for artificial intelligence (AI)-related exports and accelerated shipment activity, which are expected to offset potential headwinds from US tariffs. “Our GDP growth forecast for 2025 is revised up to 4 percent from 3 percent to reflect front-loaded exports and strong AI demand,” Singapore-based DBS senior economist Ma Tieying (馬鐵英) said in an online briefing. Taiwan’s second-quarter performance beat expectations, with GDP growth likely surpassing 5 percent, driven by a 34.1 percent year-on-year increase in exports, Ma said, citing government
UNIFYING OPPOSITION: Numerous companies have registered complaints over the potential levies, bringing together rival automakers in voicing their reservations US President Donald Trump is readying plans for industry-specific tariffs to kick in alongside his country-by-country duties in two weeks, ramping up his push to reshape the US’ standing in the global trading system by penalizing purchases from abroad. Administration officials could release details of Trump’s planned 50 percent duty on copper in the days before they are set to take effect on Friday next week, a person familiar with the matter said. That is the same date Trump’s “reciprocal” levies on products from more than 100 nations are slated to begin. Trump on Tuesday said that he is likely to impose tariffs
HELPING HAND: Approving the sale of H20s could give China the edge it needs to capture market share and become the global standard, a US representative said The US President Donald Trump administration’s decision allowing Nvidia Corp to resume shipments of its H20 artificial intelligence (AI) chips to China risks bolstering Beijing’s military capabilities and expanding its capacity to compete with the US, the head of the US House Select Committee on Strategic Competition Between the United States and the Chinese Communist Party said. “The H20, which is a cost-effective and powerful AI inference chip, far surpasses China’s indigenous capability and would therefore provide a substantial increase to China’s AI development,” committee chairman John Moolenaar, a Michigan Republican, said on Friday in a letter to US Secretary of
RSS