Economic thinkers back booming China
By Liu Li (China Daily)
Updated: 2005-05-31 00:18

An award-winning US economist yesterday said China should ignore outside pressure and keep the yuan exchange rate stable.

1999 Nobel Laureate for Economics Robert A. Mundell kept up his consistent "no change" call at a special three-day forum---said to be Asia's biggest--in Beijing yesterday.

He was among seven other economic Nobel prize winners and five distinguished scholars who gathered to offer advice and comment on China's economic relationship with the global community.

Each gave their view of China's place in the world's economy.

Premier Wen Jiabao told the laureates China attaches importance to listening to global advice and opinion.

Vowing to step up efforts to solve problems facing the nation, he added: "We are confident and capable of achieving the goals set for economic and social development."

The general consensus among the economists was the booming Chinese economy is beneficial to the world--including the United States.

Robert W. Fogel, who won the Nobel Prize for Economics in 1993, told China Daily that there were two reasons why the global community gained from China's development.

"First, China is producing more and more goods that can be of a very high quality and at a much lower price," Fogel said.

"Secondly, China will need more goods and services from other places such as Europe and the United States," he said.

Citing American education as an example, Fogel said it had become an export industry, pointing out that at least two-thirds of his students are from abroad.

Vernon L. Smith, the 2002 winner, said the huge and growing trade between America and China greatly benefits both countries.

"By outsourcing to foreign countries, US businesses save money that is available to invest in new technologies, new jobs and remain competitive in world markets. We should let it happen," Smith said.

However, "many American citizens will not now agree with that," he added.

"Their job losses are very visible while jobs created by new technology are not yet visible. When American businesses outsource goods and services to China, they save money," Smith said. "China can do it more cheaply. Those savings can be used to lower prices and acquire new technology. Everybody would be better off."

Keep it stable

If the Chinese currency were revalued, overseas direct investment will decrease and lead to more unemployment, affecting even the rest of East Asia, he said.

China has been under pressure to revalue the renminbi. US Treasury Secretary John Snow told Congress last week he was confident that China would change the yuan's decade-old peg of nearly 8.3 to the greenback within the next six months.

However, Zhang Yansheng, head of the National Development and Reform Commission's External Economy Research Institute, responded saying that it would be better to keep the exchange rate stable for up to two more years.



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