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http://www.reuters.com/article/idUSTOE68F08V20100917
China must confront risks of yuan rise -China economist
BEIJING, Sept 17 (Reuters) - China risks "negative shocks" if its yuan currency appreciates, threatening a "hollowing out" of export-driven industry, a Chinese economist said in an official newspaper on Friday, following rising pressure from Washington.
The warning about an abrupt rise in the yuan CNY=CFXS appeared in the overseas edition of the People's Daily, a day after U.S. Treasury Secretary Timothy Geithner told Congress he would press Beijing to let the yuan strengthen faster. [ID:nN16269571]
In a commentary for the Chinese paper, Sun Lijian, a professor of economics at Fudan University in Shanghai, said Beijing should ready for a yuan appreciation by accelerating domestic reforms and considering curtailing stimulus spending.
Sun said that moving too fast on the yuan could be a shock to Chinese manufacturers.
"The negative shock from an appreciation of the renminbi exchange rate following an increase in its elasticity is something the Chinese government and central bank must consider," Sun said in the paper, which serves as the chief mouthpiece of China's ruling Communist Party.
The renminbi is the formal name of the yuan currency.
The overseas edition of the People's Daily is a small offshoot of the much more widely circulated domestic edition, and often issues more forthright comment.
U.S. lawmakers are considering a tough new trade law aimed at pressing Beijing to raise sharply the value of the yuan, which many of them say is behind the gaping U.S. trade deficit with China, worth $226.9 billion in 2009.
Chinese officials have repeatedly said raising the value of the yuan will not ease U.S. manufacturing woes and joblessness.
Sun presented an appreciation in the yuan as a strong likelihood, leaving the Chinese government and manufacturers to work out how to deal with the consequences.
He said that China should "use this stage of appreciation in the renminbi and China's robust strength in foreign exchange reserves" to quicken foreign investment and acquisitions.
China would also have to consider withdrawing government-led stimulus spending from the economy to avoid excessively rapid rises in asset prices pushed by expectations of a stronger yuan.
(Reporting by Chris Buckley; Editing by Jonathan Hopfner)
BEIJING, Sept 17 (Reuters) - China risks "negative shocks" if its yuan currency appreciates, threatening a "hollowing out" of export-driven industry, a Chinese economist said in an official newspaper on Friday, following rising pressure from Washington.
The warning about an abrupt rise in the yuan CNY=CFXS appeared in the overseas edition of the People's Daily, a day after U.S. Treasury Secretary Timothy Geithner told Congress he would press Beijing to let the yuan strengthen faster. [ID:nN16269571]
In a commentary for the Chinese paper, Sun Lijian, a professor of economics at Fudan University in Shanghai, said Beijing should ready for a yuan appreciation by accelerating domestic reforms and considering curtailing stimulus spending.
Sun said that moving too fast on the yuan could be a shock to Chinese manufacturers.
"The negative shock from an appreciation of the renminbi exchange rate following an increase in its elasticity is something the Chinese government and central bank must consider," Sun said in the paper, which serves as the chief mouthpiece of China's ruling Communist Party.
The renminbi is the formal name of the yuan currency.
The overseas edition of the People's Daily is a small offshoot of the much more widely circulated domestic edition, and often issues more forthright comment.
U.S. lawmakers are considering a tough new trade law aimed at pressing Beijing to raise sharply the value of the yuan, which many of them say is behind the gaping U.S. trade deficit with China, worth $226.9 billion in 2009.
Chinese officials have repeatedly said raising the value of the yuan will not ease U.S. manufacturing woes and joblessness.
Sun presented an appreciation in the yuan as a strong likelihood, leaving the Chinese government and manufacturers to work out how to deal with the consequences.
He said that China should "use this stage of appreciation in the renminbi and China's robust strength in foreign exchange reserves" to quicken foreign investment and acquisitions.
China would also have to consider withdrawing government-led stimulus spending from the economy to avoid excessively rapid rises in asset prices pushed by expectations of a stronger yuan.
(Reporting by Chris Buckley; Editing by Jonathan Hopfner)
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