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IMF Urges Boosting of Yuan |
| Source: |
worldbank.org |
| Source Date: |
Thursday, July 21, 2011 |
| Focus: |
ICT for MDGs
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| Created: |
Jul 26, 2011 |
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“Inflation, real-estate bubbles and weak monetary controls pose ‘significant risks to financial and macroeconomic stability’ in China, and Beijing should boost the value of its currency to combat those threats, the International Monetary Fund (IMF) said. The IMF used its annual review of China's economy to lay out a broad agenda of change for China – including a stronger currency, higher interest rates, reduced advantages for big state-owned enterprises and a liberalized financial sector. Such changes were necessary, the IMF argued, to improve Chinese living standards and reduce conflict with its trading partners….” [Dow Jones]
AP adds that “…China's inflation rose to a three-year high of 6.4 percent in June, driven by a 14.4 percent jump in food costs. A stronger yuan might help to cool prices by making oil, food and other imports cheaper in local currency terms. The IMF said China's yuan is undervalued by 3 to 23 percent – depending on which method is used to measure the gap – and currency controls are holding back reforms that could make its state-dominated financial system more flexible and efficient….” [Associated Press]
Reuters notes that “…China's big trading partners worry that its rapid economic growth cannot be sustained and it could suffer a ‘hard landing’ that spreads damage around the world, according to the report…. The partners also worried that continued high investment in China could create excess capacity…. As a trade powerhouse, China can ‘transmit’ economic shocks widely, whether they originate domestically or elsewhere, the IMF said. It is also becoming large enough to be the source of shocks that affect the world….” [Reuters]
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IMF Urges Boosting of Yuan “Inflation real-estate bubbles and weak monetary controls pose ‘significant risks to financial and macroeconomic stability’ in China and Beijing should boost the value of its currency to combat those threats the International Monetary Fund IMF said
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