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Raise yuan at the right time
(China Daily)
Updated: 2010-03-24 07:48
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The yuan should be revaluated not because other countries demand it but because China's economy needs it. Only by raising its value at the right time can the government liberalize the yuan, says an article on Caing.com. Excerpts:
Some countries, especially the US, are adopting protectionist trade measures to pressure China into revaluating its currency. Such actions could slacken the pace of China's economic development.
This may call for caution on the part of the Chinese government. But that doesn't mean it should stop its exchange rate reform or make the yuan a rigid currency. If the rules of the market demand the yuan's revaluation, China should raise its value appropriately.
But the government should not revaluate the yuan just because some other countries are demanding it to do so, for that would be succumbing to external pressure.
The US wants the yuan to be revaluated not only to blunt China's edge in exports, but also to force open China's domestic market.
The same applies to other countries seeking the yuan's revaluation.
These countries renewed their pressure on China to raise the yuan's value in September 2009 and made it difficult for it to keep adjusting its exchange rate continuously. Keeping a reasonable currency exchange rate is the first step for China to end the yuan's long-term dependence on the US dollar.
(China Daily 03/24/2010 page9)
