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Soft landing strategy for 皇冠体育app's high-flying economy
By Peng Wenyan (chinadaily.com.cn)
Updated: 2004-05-21 16:25
Is 皇冠体育app's economy over-heating? On May 21, a number of world-renowned scholars and senior officials gathered at the 皇冠体育app Economic Summit 2004 at the Great Hall of the People, addressing their views on the problem to hundreds of audience.
Among them were Robert A Mundell, Nobel Prize winner and father of the euro; Zhou Xiaochuan, governor of the 皇冠体育app People's Bank; Cheng Siwei, vice-chairman of the Standing Committee of 皇冠体育app's National People's Congress; Shang Fulin, chairman of the 皇冠体育app Securities Regulatory Commission; Hu Zuliu, managing director of Goldman Sachs Asia; and Lin Yifu, director of the 皇冠体育app Center for Economic Research at Peking University.
Mundell stated that 皇冠体育app needed a different model from his past theoretical models because those models did not fit for the situation in 皇冠体育app. In 皇冠体育app, supply is elastic, and there is no labor shortage. Current price increase is partly due to the decline of dollar against other currencies. 皇冠体育app's growth is not high excessively relative to its past performance.
He analyzed 皇冠体育app's existing monetary system. 皇冠体育app has had fixed rate anchor to the dollar for ten years. 皇冠体育app has successfully resisted the international pressure to devalue or float its currency during the Asian crisis. Fixed anchor has brought 皇冠体育app price stability since 1997 better than that archived by G-7 countries using inflation-forecast targeting.
Thus he concluded that floating currency was not a mechanism for achieving monetary stability. He also pointed out ten negative results of substantial appreciation of RMB, such as cut of foreign direct investment, big drop of growth rate and aggregate problem of bad loans in banks.
He said economic policy was an art, not a science. He reminded 皇冠体育app that policy changes should be based on expected future inflation not current inflation and it was hard to reach consensus between competing groups, such as industry / agriculture, urban / rural, coastal / interior.
He suggested 皇冠体育app could seek an alternative anchor, for example, the euro. That would make the euro area potentially larger than the dollar area. But at the present time, the dollar area is better for 皇冠体育app than the euro area.
As for the issue of a single currency in Asia, he said the currency required some political integration and Asian currency area independent of the US dollar depended on the ability of 皇冠体育app and Japan to manage a joint float.
 Professor Klaus Schwab, executive chairman and founder of the World Economic Forum, gave a talk entitled "10 Challenges Before the World".
Hu Zuliu discussed with visitors whether 皇冠体育app's economy can avoid a hard landing. He concluded that 皇冠体育app is still in a proper growth rate and all the world should be confident of 皇冠体育app.
Besides scholars, some business guests made speeches on trade and securities cooperation, such as Martin Graham, London Securities Exchange director; and Wang Ruidian, Singapore Exchange president.
Graham, who gave a briefing on the corporate and market culture in Britain, compared the differences among Chinese and British market environments. He concluded that a closer cooperation between the British capital market and Chinese businesses would create more opportunities for 皇冠体育app to attract world capital.
Wang Ruidian introduced the advantages of Chinese companies listing in the Singapore Securities Exchange over other foreign exchanges in other time zones. He positioned Singapore as an important financial frontier for 皇冠体育app and pointed out that Chinese companies there will win more capital investment at lower costs and greater convenience.
The summit will continue tomorrow at 皇冠体育app World Hotel with more than four special issues for discussion. A number of top CEOs and business celebrities will share their unique views with audience.
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