Global General

Currency is off limits at G20 summit

By Wang Xiaotian (China Daily)
Updated: 2010-06-19 08:36

But if China needs to tighten its monetary stance to contain key economic risks, moves on the domestic front, such as raising interest rates, would be more practical, he said.

To effectively control the risks related to property prices, local government debts and banks' non-performing loans, China should let interest rates play a larger role in monetary policy, said Kuijs.

Ardo Hansson, the World Bank's lead economist for China, argued that global and domestic substantial uncertainty calls for policy flexibility rather than continued stimulus by default.

However, views still remain divided on the yuan among Chinese economists, some of whom suggest China might have missed the best time to start yuan appreciation.

"Now we are facing rising challenges from the European debt crisis and a slow-down in economic growth," said Huang Yiping, an economist with Peking University, adding that the longer China waits to appreciate the yuan, the worse consequence it may bear in possible trade wars.

Lei Yanhua, a researcher with the Chinese Academy of International Trade and Economic Cooperation affiliated to the Ministry of Commerce, argued that appreciating the yuan would increase the living cost of American middle-class families and jeopardize the Chinese economy when it is in the middle of significant restructuring.