BEIJING - Robert Mundell, Nobel Prize Laureate in Economics, warned here on Wednesday that an accelerating appreciation of the yuan could damage the Chinese economy.
"Chinese exchange rate policy now will have to pay off, and inflation and other things may go wrong if it is too much," said Mundell, who was made a Nobel laureate in 1999, at the on-going International Finance Forum in Beijing.
Mundell said China should learn lessons from Japan's experience. The yen's value tripled from 1985 to 1995, leading to a deflation that plagued the country for 15 years.
"Five percent a year will not be a great damage to Chinese economy, but be aware of the effect of accelerating it," said Mundell.
China's yuan has appreciated some 10 percent since the reform of exchange rate policy in July 2005.