China doesn't have to worry about an overheated economy, said
Nobel Prize Laureate Robert Mundell in Zhuhai Thursday.
Mundell was in Zhuhai to attend the World Economic Development
Declaration Conference (WEDDC) and was one of the drafters of the
declaration.
China has seen a rapid growth of forex reserve this year leading
to an increasing money supply, with which the economy is labeled
overheated, but this is not a problem China has to worry about, he
told the press at WEDDC, an economic forum running from Thursday to
Friday at a coastal resort in south China's Guangdong
Province.
The very slight inflation this year will counteract the
deflation China had last year and the currency expansion will lead
to a growth of import to balance China's export surplus, he said.
This will adjust Chinese economy to a favorable status, he
added.
According to the
(PBOC), the broad money supply (M2) increased 20.7 percent on a
year-on-year basis in China by September this year while the narrow
money supply (M1) up 18.5 percent.
The fast growing forex reserve is pushed strongly by commercial
banks rather than overheated economy, Mundell said.
Those banks pour a huge amount of capital into China, predicting
that the country will appreciate its currency and, intend to cash
in, he added.
The PBOC said China's forex reserve added by US$97.5 billion in
the first nine months this year, US$51 billion more than that of
last year.
By September, China's forex reserve totaled US$383
billion.??
?
(Xinhua News Agency November 7, 2003)