Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : China Warehouse- More Than Crockery -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (3539)	10/3/2004 10:23:34 PM
From: RealMuLan	Read Replies (1) \| Respond to of 6370

No Time Frame for Yuan Move -China Sun Oct 3, 4:29 PM ET Business - Reuters By Tim Ahmann WASHINGTON (Reuters) - There is no time frame for a shift away from Beijing's tight currency peg and the United States is mistaken if it thinks it will reap big benefits from a move, a top Chinese central bank official said on Sunday. "We have already said time and again we are moving toward a more market-based, supply-and-demand based, flexible exchange rate. How long it takes, I don't know," Li Ruogo, the deputy governor at China's central bank. "I've said many times because China has an 8,000 year history, a decade is truly a short period," he joked. "I've been asked numerous times, 'What is the timeframe?' I tell them, 'No time frame."' China's policy of pegging the value of its currency, the yuan, at about 8.28 to the U.S. dollar was a top topic at talks in Washington this weekend among finance officials from around the globe. The United States has publicly called on China to move more quickly toward a flexible currency regime, but Beijing has made clear it will move at its own pace. U.S. manufacturing and labor groups have complained vociferously the peg gives Chinese producers a leg up in world markets, and the issue has resonated ahead of the U.S. presidential election, now under five weeks away. Li said if China revalued its currency, U.S. consumers would end up paying higher prices for products with little impact on the massive U.S. trade deficit. "If you don't import from China you import ... from other countries, simply at higher cost. So, U.S. consumers will be disadvantaged by that," he said. At the same time, with imports from other countries displacing imports from China, there would be "a very insignificant impact on the U.S. trade deficit." Li said that because a foreign exchange shift would mainly just shift trade flows, arguments U.S. jobs were being lost to China because of the yuan peg were off the mark. "No matter how the exchange rate will change ... those so-called job opportunities will not go back to the United States." He said the way to rein in the massive U.S. trade shortfall was not by shifting exchange rates, but by increasing U.S. domestic savings. "The current account problem is not created by foreign exchange rates. It is created by the savings rate in the United States. That's my view," he said. "To change the current account deficit, the U.S. has to save more." The central bank official reiterated that China had more work to do to lay the groundwork for a yuan shift and warned that moving too quickly could lead to a misstep that not only China would regret. "I know for sure the (International Monetary Fund (news - web sites)) is not able to help us and I know for sure no other country can save us or rescue the Chinese economy," he said. "I personally don't want to produce another 100 million refugees ... to Korea or Japan or the United States." Li played down fears of a hard landing in the rapidly growing Chinese economy, saying that while the growth rate may be volatile from quarter to quarter, the country was capable of expanding for decades to come. "Eventually the economy will come to a level that is sustainable," he said, adding that China's economic models show "that if we keep 7-8 percent growth, it can easily go another 20 years." (Additional reporting by Alister Bull) story.news.yahoo.com