China urged to unpeg currency
China’s currency has become a global hot topic with a European Union representative and a Chinese economist both urging the country to unpeg its currency from the US dollar to allow fair trading.
“I hope China will continue to improve its openness to trade and investment but it must show its responsibility by being able to address thorny questions such as currency misalignment,” said Karel de Gucht, EU trade commissioner-designate.
China claims that a stable yuan is in everyone’s interest and will not allow the yuan to appreciate.
However Chinese economist Dr Zhang Bin, an academic at the Chinese Academy of Social Sciences, released a report calling for the yuan to appreciate by 10 percent before implementing a managed rise to keep it within a three-percent fluctuation band.
“If the exchange rate is totally wrong, then interest rates, wages, land and energy prices are totally distorted,” he said. “The low exchange rate serves the current motives of both the Government and business but it’s bad for consumers and the common labour force.”
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