Business
China should keep renminbi peg: Noble prize winner
2005/10/13
By William C. Pao The China Post
The winner of the 1999 Nobel Prize in Economics yesterday said mainland China should keep the renminbi pegged against the U.S. dollar in the best interests of everyone.
If Beijing had to raise the value of the RMB -- due to the various international pressures -- it should raise it by "half of a percent each month, or six percent a year," said Robert Mundell, professor of Columbia University.
Mundell made the remarks at the Textile International Forum and Exhibition (TIFE) 2005, an event organized by the Ministry of Economic Affairs and executed by the Taiwan Textile Research Institute (TTRI).
Mundell said a revalued renminbi would lead to the following in China: slowed economic growth, less foreign direct investments, more non-performing loans, and an increase in unemployment rate.
A slowed economy in China is not good for anyone, he said, including the United States as America has become more dependent on mainland China over the years.
The renminbi went up by two percent back in July after Beijing abandoned its decades-long policy of fixing it against the greenback. Mundell called it a "diplomatic" move as China had been pressured by the international community for years to appreciate the RMB.
In his words, instead of focusing on whether renminbi should be revalued, the focus should be on eliminating China's balance of payment surplus and freeing up the Chinese market for foreign capital flow.
The economist is a proponent of currency-pegging policies, calling free-market and laissez-faire advocates as "naive." He cited countries such as Malaysia, which has been pegging the ringgit at 3.8 against the U.S. dollar, as good examples of using an intervention approach to get itself out of the Asian Financial Crisis early.
Speaking on textiles, he said a new quota system imposed on Chinese textiles by Europe and the United States would only help China become better, as the move would force Chinese manufacturers to shift their energy and resources to higher-end products.
Taiwan should definitely focus on innovative, value-added textiles to differentiate its products from those of mainland China, although the other side of the strait has gotten quite good at high-end manufacturing, he said.
Copyright © 2005 The China Post.
All rights reserved.
Please refer to the TERMS AND CONDITIONS of use
2005/10/13
By William C. Pao The China Post
The winner of the 1999 Nobel Prize in Economics yesterday said mainland China should keep the renminbi pegged against the U.S. dollar in the best interests of everyone.
If Beijing had to raise the value of the RMB -- due to the various international pressures -- it should raise it by "half of a percent each month, or six percent a year," said Robert Mundell, professor of Columbia University.
Mundell made the remarks at the Textile International Forum and Exhibition (TIFE) 2005, an event organized by the Ministry of Economic Affairs and executed by the Taiwan Textile Research Institute (TTRI).
Mundell said a revalued renminbi would lead to the following in China: slowed economic growth, less foreign direct investments, more non-performing loans, and an increase in unemployment rate.
A slowed economy in China is not good for anyone, he said, including the United States as America has become more dependent on mainland China over the years.
The renminbi went up by two percent back in July after Beijing abandoned its decades-long policy of fixing it against the greenback. Mundell called it a "diplomatic" move as China had been pressured by the international community for years to appreciate the RMB.
In his words, instead of focusing on whether renminbi should be revalued, the focus should be on eliminating China's balance of payment surplus and freeing up the Chinese market for foreign capital flow.
The economist is a proponent of currency-pegging policies, calling free-market and laissez-faire advocates as "naive." He cited countries such as Malaysia, which has been pegging the ringgit at 3.8 against the U.S. dollar, as good examples of using an intervention approach to get itself out of the Asian Financial Crisis early.
Speaking on textiles, he said a new quota system imposed on Chinese textiles by Europe and the United States would only help China become better, as the move would force Chinese manufacturers to shift their energy and resources to higher-end products.
Taiwan should definitely focus on innovative, value-added textiles to differentiate its products from those of mainland China, although the other side of the strait has gotten quite good at high-end manufacturing, he said.
Copyright © 2005 The China Post.
All rights reserved.
Please refer to the TERMS AND CONDITIONS of use
posted by Eastlaw at Thursday, October 13, 2005
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