World Bank Backs China's Cautious Approach to Liberalizing Forex System [View All]

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Friday September 5, 2:38 PM
World Bank backs China's cautious approach to liberalizing forex system


BEIJING, Sept 5 (AFP) - The World Bank said it supports China's cautious approach to liberalizing its exchange rate system amid mounting calls for the Chinese currency, the yuan, to be allowed to strengthen.

The bank backs China's decision to move gradually, given the weakness of its financial system and the need to make adjustments as a result of World Trade Organization membership, a ranking World Bank official said at a briefing Friday.
"We agree with an incremental approach to most things," Deepak Bhattasali, lead economist for the World Bank in China, told AFP. "An incremental approach in most development processes is better."

The World Bank's comments came at the end of a week marked by renewed focus on the yuan, said by many critics to be sharply undervalued and so giving Chinese exporters an unfair advantage.
The yuan has been pegged to the US dollar for the past nine years and has fallen along with the American currency in recent months.

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The US trade deficit with China reached 103 billion dollars -- about a quarter of the total US deficit -- in 2002. So far in 2003, it is up another 27 percent from last year. World Bank Senior Economist Dominique van der Mensbrugghe told the briefing in Beijing that the real problem was to be found inside the United States itself.

"The trade deficit in the United States is a macroeconomic phenomenon and it's not a phenomenon that is related to the trade deficit it has with China," he said....MORE >>

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