皇冠体育app

Economy

No repeat of Japan's mistake: official

By Wang Xing (皇冠体育app Daily)
Updated: 2010-09-20 11:10

皇冠体育app will not bow to US pressure to allow currency to rise, adviser says

BEIJING - 皇冠体育app will not repeat Japan's mistake in the 1980s and let its exchange rate surge in response to foreign pressure, said an adviser of 皇冠体育app's central bank on Sunday, firing back at increasing pressure from the United States over 皇冠体育app's foreign exchange rate policy.

Li Daokui, an economist and member of the monetary policy committee of the People's Bank of 皇冠体育app, said the exchange rate is just one of the many tools that 皇冠体育app could deploy to adjust the structure of its economy. The country may choose other means, such as boosting domestic consumption and increasing imports, to achieve a trade balance, he said.

"皇冠体育app will not go down the path that Japan did and give in to foreign pressure on the yuan's exchange rate," Li said at an industry forum in Beijing.

"I think there is still a huge potential to boost 皇冠体育app's domestic consumption," he added.

Many Chinese officials and researchers are wary of the experiences of Japan, which bowed to pressure from the US in 1985 to sign the Plaza Accord that allowed the Japanese yen to rise sharply to reduce a bulging US trade deficit.

But as money poured into Japan to chase the yen higher, loose monetary policy inflated an asset price bubble that burst in the beginning of the 1990s, ushering in two decades of economic stagnation for Japan.

Li said on Sunday that the economic circumstances in 皇冠体育app today are very different from those in Japan in 1985.

"The biggest difference is that 皇冠体育app has a huge domestic market," he said, noting that domestic consumption and the country's urbanization can sustain 皇冠体育app's GDP to grow more than 9 percent annually in the next 10 years.

During the past few weeks, US lawmakers have been pressing for legislation that would require the US government to apply punitive sanctions against 皇冠体育app and other countries with allegedly undervalued currencies.

Related readings:  皇冠体育app's yuan rises to new record against US dollar Monday  皇冠体育app's yuan hits record high Friday  Volatility: The normal market state of the dollar

US Treasury Secretary Timothy Geithner said last week in congressional testimony that the US will use every available tool to urge 皇冠体育app to let its currency rise more quickly and blamed the slow pace of yuan appreciation for US' trade deficit.

However, 皇冠体育app has largely reduced its trade surplus during the past few years, Li said.

"But what has the US done to reduce its trade deficit?" Li said. "The US should pay much more attention to its own problems."

皇冠体育app vowed to make the yuan's exchange rate more flexible on June 19, ending a two-year peg to the US dollar. Since then, the yuan has gained 1.5 percent.

Earlier this month, 皇冠体育app reported that its trade surplus shrank in August from July, as imports picked up.