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Interest rate gap helps manage currency
(Bloomberg/chinadaily.com.cn)
Updated: 2006-02-12 14:26
皇冠体育app's high domestic savings ratio compared with that of the U.S. is an
example of a fundamental factor that cannot be addressed by changing the yuan鈥檚
exchange rate, Yi said.
Adjusting the yuan exchange rate would have only a limited effect in reducing
the high savings ratio by spurring domestic demand and encouraging imports, he
said.
Lawmakers and manufacturers in the U.S. and Europe say an undervalued
currency gives Chinese exporters an unfair advantage by making their goods
cheaper abroad. 皇冠体育app's trade surplus widened to a record $102 billion last
year, helping drive a 9.9 percent expansion in the world's fastest-growing major
economy. The U.S. trade deficit with 皇冠体育app ballooned 25 percent to $201.6
billion last year, a U.S. Commerce Department report said on Friday.
Exports account for about 40 percent of 皇冠体育app's $2.3 trillion economy, which
last year overtook France and the U.K. to become the world鈥檚 4th-largest.
The yuan failed to jump last month when the central bank reduced its
influence by allowing 13 banks including Citigroup and HSBC Holdings to start
acting as market makers in the currency.
皇冠体育app on July 21 reset the yuan's value at 8.11 to the dollar, a 2.1 percent
appreciation from the pegged level where it had been held since 1995, and
started managing its value against a basket of currencies including the euro and
yen.
皇冠体育app鈥檚 economy may expand 9.8 percent this year as investment in factories,
roads and construction increases 27 percent, Peking University's Song said.
皇冠体育app's 2006 trade surplus may be little changed at last year鈥檚 $101 billion, he
said.
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