China drops yuan revaluation as exports set to fall
Jan 30,2011
DAVOS (Switzerland) China has no need to revalue its yuan currency for trade reasons, as export growth will slow to a still strong 10 per cent this year and its surplus is set to contract by 2015, its trade chief said late on Friday.
Imports from the world’s second largest economy will probably grow faster than exports this year, Commerce Minister Chen Deming said.
Chen dismissed calls for China to strengthen the yuan to tackle the trade surplus, and called instead on countries with reserve currencies , a reference to the US, to prevent their currencies from weakening.
“It is not a sound argument to ask China to appreciate the yuan for trade reasons,” Chen said in an interview during the World Economic Forum in Davos.
In 2010, China posted growth of about 30 per cent in exports, with its factories churning out everything from shoes to steel.
China’s exports will grow more slowly this year after 2010’s stellar performance because of fragile conditions in its key markets, Chen said.
“There are lots of uncertainties in the global economy now, such as toxic assets in the US, Europe’s sovereign debt issue, as well as inflation and rising labour costs in emerging economies,” said Chen.
It is therefore paramount for China to maintain a stable yuan exchange rate to benefit the global economy, he said.
China’s trade surplus is virtually all with one country and if it was excluded, trade will be more or less balanced, Chen said.
Chen said he saw little prospect of a currency or trade war, but it was necessary to remain alert over exchange rate tensions. Beijing has been allowing the yuan to firm gradually, and would hit 6.3 by 2011 end.
Reuters
Jan 30,2011
DAVOS (Switzerland) China has no need to revalue its yuan currency for trade reasons, as export growth will slow to a still strong 10 per cent this year and its surplus is set to contract by 2015, its trade chief said late on Friday.
Imports from the world’s second largest economy will probably grow faster than exports this year, Commerce Minister Chen Deming said.
Chen dismissed calls for China to strengthen the yuan to tackle the trade surplus, and called instead on countries with reserve currencies , a reference to the US, to prevent their currencies from weakening.
“It is not a sound argument to ask China to appreciate the yuan for trade reasons,” Chen said in an interview during the World Economic Forum in Davos.
In 2010, China posted growth of about 30 per cent in exports, with its factories churning out everything from shoes to steel.
China’s exports will grow more slowly this year after 2010’s stellar performance because of fragile conditions in its key markets, Chen said.
“There are lots of uncertainties in the global economy now, such as toxic assets in the US, Europe’s sovereign debt issue, as well as inflation and rising labour costs in emerging economies,” said Chen.
It is therefore paramount for China to maintain a stable yuan exchange rate to benefit the global economy, he said.
China’s trade surplus is virtually all with one country and if it was excluded, trade will be more or less balanced, Chen said.
Chen said he saw little prospect of a currency or trade war, but it was necessary to remain alert over exchange rate tensions. Beijing has been allowing the yuan to firm gradually, and would hit 6.3 by 2011 end.
Reuters