China was urged to revalue its currency by G7 Finance Ministers and Central Bank Governors at their meeting in Istanbul in October this year. How has this been received in China?
Overall, the majority of scholars and researchers insist that the RMB will appreciate. A researcher from Agricultural Bank of China (ABC) believes that it is hard to say whether this is good or bad in the short term, but it will benefit China’s long time strategy to revalue the RMB at a stable pace. Other researchers from the Development Research Centre of the State Council, the Bank of China and the State Information Center consider that economic recovery will trigger RMB appreciation within a narrow range. Others suggest that the RMB may appreciate ‘in disguise’ with small interest rate increases over the next year. Some worry that anticipation of RMB appreciation will push short-term international capital to flow into China in ways that will undermine the monetary policy autonomy of China, and others think that the most urgent priority is to manage China’s own business and insulate the Chinese economy from outside risk.
In the media, however, we find different opinions again. They tell the public that there are two reasons which could explain the Western countries forcing China to appreciate the RMB during the global financial crisis period: first, to divert international attention and shirk their responsibilities; and second, to shift the crisis to China.
As for the attitudes of officials, Yi Gang, Vice Governor of People’s Bank of China, has stated that priority will be given to maintaining a stable exchange rate, ahead of China’s foreign exchange policy. Meanwhile, Wu Xiaoling, vice-chairman of the Financial and Economic Committee of the NPC Standing Committee andthe former Vice Governor of People’s Bank of China, indicated that there is no natural relationship between trade surplus and foreign exchange rate, but that we need a more flexible exchange-rate mechanism on market allocation of resources perspective.
