ECB says stronger yuan will aid economy
July 16, 2010 - 6:57AM
The European Central Bank has urged China to let the yuan appreciate against other currencies, saying it could help the fast-growing economy manage a so-called "soft landing".
A rise in the yuan's value "will ... give the People's Bank of China (PBC) greater scope to use monetary policy tools to fight inflation while managing a soft landing of the economy," the ECB said on Thursday in its July monthly bulletin.
The PBC said a short time later that it would maintain a managed floating yuan exchange rate regime, because such a policy was in the nation's long-term interests.
"The regime is essential for economic restructuring and the optimisation of resource allocation," vice governor Hu Xiaolian said in a speech posted on the bank's website.
The move, initially announced in June, has been welcomed by trading partners who say the yuan has been undervalued to make Chinese products more competitive on global markets.
The ECB noted that the initial announcement on June 19, "did not, however, lead to any change in China's de jure exchange rate regime".
The ECB added that "it is too early to assess how the PBC will manage the exchange rate in practice under the new regime".
Meanwhile, China's National Bureau of Statistics said economic growth had slowed in the second quarter as massive stimulus spending was scaled back and moves to rein in soaring property prices began to bite.
Gross domestic product in the world's third-largest economy nonetheless maintained double-digit growth for the third quarter in a row, expanding 10.3 per cent in the three months to June, the bureau's data showed.
July 16, 2010 - 6:57AM
The European Central Bank has urged China to let the yuan appreciate against other currencies, saying it could help the fast-growing economy manage a so-called "soft landing".
A rise in the yuan's value "will ... give the People's Bank of China (PBC) greater scope to use monetary policy tools to fight inflation while managing a soft landing of the economy," the ECB said on Thursday in its July monthly bulletin.
The PBC said a short time later that it would maintain a managed floating yuan exchange rate regime, because such a policy was in the nation's long-term interests.
"The regime is essential for economic restructuring and the optimisation of resource allocation," vice governor Hu Xiaolian said in a speech posted on the bank's website.
The move, initially announced in June, has been welcomed by trading partners who say the yuan has been undervalued to make Chinese products more competitive on global markets.
The ECB noted that the initial announcement on June 19, "did not, however, lead to any change in China's de jure exchange rate regime".
The ECB added that "it is too early to assess how the PBC will manage the exchange rate in practice under the new regime".
Meanwhile, China's National Bureau of Statistics said economic growth had slowed in the second quarter as massive stimulus spending was scaled back and moves to rein in soaring property prices began to bite.
Gross domestic product in the world's third-largest economy nonetheless maintained double-digit growth for the third quarter in a row, expanding 10.3 per cent in the three months to June, the bureau's data showed.