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Keeping cool towards foreign calls to appreciate RMB
( 2003-08-05 14:23) (chinadaily.com.cn)

China's authorities should always keep a cool head towards mounting overseas calls these days to raise the value of its RMB currency, some world-known economists said in Beijing.

China does not have to appreciate its currency at the current moment, said the experts. They said the eye-catching economic achievements made in China are not coming from the allegedly undervalued RMB.

It is not as urgent as it was in the 1997 Asian financial crises for China to raise the value of the RMB, said Tao Dong, an economist from the Credit Suisse First Boston.

He said China could ease the pressure of the calls by adjusting the interest rate, encouraging overseas investment in its domestic enterprises and boosting overseas tourist programs for Chinese nationals.

A report from Goldman Sachs, a prestigious international investment bank, also pointed out that the price advantage is just a small part of increasing the competitiveness of China's commodities in overseas markets.

The real advantage of Chinese commodities comes from the availability of a cheap but high-quality labor resource, the Goldman Sachs report said.

China's trade volume accounts for only 5 percent of the world and it would lose few international market shares for its exports, even if the country did appreciate its currency by 10 percent, said Morgan Stanley global chief economist Steven Roach.

Zheng Xingjuan, the Morgan Stanley chief Chinese economist, estimated that on condition that China freed its forex interest, a huge amount of "hot money" would flood China's forex market seeking speculation opportunities.

The Asian financial crisis was triggered by this, and China doesn't have to suffer this painful consequence, Zheng said.

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