Chinese Mandarin - RMB appreciation: causes and consequences

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RMB appreciation: causes and consequences

www.chinanews.cn 2005-03-21 13:53:42

Chinanews, March 21 - Yesterday morning at the South China University of
Technology, Tang Guoxing, a professor at Fudan University's School of
Management, said that if the RMB appreciated, it would bring disastrous
consequences to both the central and commercial banks, and that about 22
million US dollars of foreign net assets would shrink.
During his talk on the Chinese currency, Tang indicated that the RMB is
facing four types of pressure: a lasting regular payment surplus, a high
yield rate on foreign capital in China, widespread expectations of the
RMB's appreciation, and China's low inflation rate. In Tang's opinion,
the first two factors are long-term and also the most important. Because
the two can't be dispelled, RMB appreciation is unavoidable. He believes
the latter two are short-term factors.
Tang also believes that China's capital inflow has resulted in potential
pressure on the RMB. However, the RMB's appreciation could bring with it
both advantages and disadvantages. The advantages include wealth
increases, reduction of the repayment burden on external debts and
promotion of the development of high-level industrial structure. The
disadvantages are primarily the reduction of international
competitiveness and the shrinkage of foreign assets.

          ��Expert: RMB will appreciate but no fixed timetable
(2005-03-10)
          ��No fixed timetable for reforming the RMB (2005-03-07)
          ��China to ease restrictions on RMB (2005-03-04)
          ��G7 meeting expected to find it hard to force RMB appreciation
(2005-02-01)
          ��Soros opposed excessive pressure on RMB (2005-02-01)
          ��Chinese minister to attend G7 to discuss the RMB (2005-01-28)
          ��Wrong timing for adjusting the RMB (2005-01-27)
          ��RMB Appreciation to create its own bubble? (2005-01-20)

E-mail: zhangqinghua@chinanews.com.cn Tel: 8610-88387443 Fax:
8610-68327649

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