The World Bank yesterday urged China to let its currency rise to contain inflation and stop the economy overheating, predicting that growth would gallop ahead at 9.5 percent this year.
“Strengthening the exchange rate can help reduce inflationary pressures and rebalance the economy,” the World Bank said in its latest quarterly update on the world’s third-largest economy.
China is facing growing international pressure, particularly from the US, to let the yuan appreciate. It has been effectively pegged to the dollar since the middle of 2008.
US senators on Tuesday introduced legislation that would impose tough new penalties on China if it failed to revalue its currency, which they say Beijing keeps artificially low to secure an unfair edge in trade.
The US action follows Chinese Premier Wen Jiabao’s (溫家寶) insistence at the weekend that Beijing would resist any foreign pressure for a stronger yuan, currently pegged within a narrow range at about 6.8 to the US dollar.
“Inflation expectations can be contained by a tighter monetary policy stance and a stronger exchange rate, while monetary policy also has a key role to play in containing risks of asset price bubbles,” the World Bank said.
The bank projected China’s GDP would surge 9.5 percent this year, markedly higher than the government’s own target of around 8 percent and last year’s growth rate of 8.7 percent.
Recovering demand for Chinese exports and robust real estate investment will be the key drivers of the economy this year as massive government-backed spending slows, it said.
While inflation risks remained modest, the bank said containing inflationary expectations, reining in property prices and keeping local government debt “manageable” were key tasks for policymakers.
In Washington, US Treasury Secretary Timothy Geitner said that the Senate bill calling for stiff trade sanctions if China does not act was a sign of how strongly China’s trading partners feel about the issue.
China, however, said yesterday that focusing on the yuan would not help solve problems in Sino-US bilateral trade relations.
“We oppose the over-emphasis on the yuan’s exchange rate,” a Chinese commerce ministry official said. “The yuan’s exchange rate is not a magic potion for solving global economic imbalances.”
NO-LIMITS PARTNERSHIP: ‘The bottom line’ is that if the US were to have a conflict with China or Russia it would likely open up a second front with the other, a US senator said Beijing and Moscow could cooperate in a conflict over Taiwan, the top US intelligence chief told the US Senate this week. “We see China and Russia, for the first time, exercising together in relation to Taiwan and recognizing that this is a place where China definitely wants Russia to be working with them, and we see no reason why they wouldn’t,” US Director of National Intelligence Avril Haines told a US Senate Committee on Armed Services hearing on Thursday. US Senator Mike Rounds asked Haines about such a potential scenario. He also asked US Defense Intelligence Agency Director Lieutenant General Jeffrey Kruse
INSPIRING: Taiwan has been a model in the Asia-Pacific region with its democratic transition, free and fair elections and open society, the vice president-elect said Taiwan can play a leadership role in the Asia-Pacific region, vice president-elect Hsiao Bi-khim (蕭美琴) told a forum in Taipei yesterday, highlighting the nation’s resilience in the face of geopolitical challenges. “Not only can Taiwan help, but Taiwan can lead ... not only can Taiwan play a leadership role, but Taiwan’s leadership is important to the world,” Hsiao told the annual forum hosted by the Center for Asia-Pacific Resilience and Innovation think tank. Hsiao thanked Taiwan’s international friends for their long-term support, citing the example of US President Joe Biden last month signing into law a bill to provide aid to Taiwan,
China’s intrusive and territorial claims in the Indo-Pacific region are “illegal, coercive, aggressive and deceptive,” new US Indo-Pacific Commander Admiral Samuel Paparo said on Friday, adding that he would continue working with allies and partners to keep the area free and open. Paparo made the remarks at a change-of-command ceremony at Joint Base Pearl Harbor-Hickam in Hawaii, where he took over the command from Admiral John Aquilino. “Our world faces a complex problem set in the troubling actions of the People’s Republic of China [PRC] and its rapid buildup of forces. We must be ready to answer the PRC’s increasingly intrusive and
STATE OF THE NATION: The legislature should invite the president to deliver an address every year, the TPP said, adding that Lai should also have to answer legislators’ questions The Chinese Nationalist Party (KMT) yesterday proposed inviting president-elect William Lai (賴清德) to make a historic first state of the nation address at the legislature following his inauguration on May 20. Lai is expected to face many domestic and international challenges, and should clarify his intended policies with the public’s representatives, KMT caucus secretary-general Hung Meng-kai (洪孟楷) said when making the proposal at a meeting of the legislature’s Procedure Committee. The committee voted to add the item to the agenda for Friday, along with another similar proposal put forward by the Taiwan People’s Party (TPP). The invitation is in line with Article 15-2