Stable RMB exchange rate helps emerging markets recover
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A stable exchange rate for the Chinese currency RMB will not only help ensure a steady economic recovery in China, but will also bring benefits to other emerging economies hit by the global crisis, a renowned Argentine economist says.
Some Western countries are putting great pressure on the Chinese government to appreciate the RMB in a short time, claiming that it could help reduce China's trade surplus and make global economy more "balanced," said Jorge Castro, head of Argentina's Strategic Planning Institute, in a recent interview with Xinhua.
But that is actually a Western attempt, by forcing an appreciation of the Chinese currency, to shift the costs of the global financial crisis onto others, Castro pointed out.
As uncertainty remains over the prospect of a U.S. recovery and some EU nations are still dogged by the sovereign debt crisis, the stability of the Chinese economy serves as an anchor to a steady global recovery, Castro said.
China's economy picked up quickly after bottoming out last year, thanks to a series of proactive measures adopted by the Chinese government to fight the crisis, Castro said.
In view of last year's huge growth in China's capital and real estate markets, signs of a sharp appreciation of the RMB could trigger a massive influx of international hot money and domestic funds into those markets and fuel a dangerous bubble in the virtual economy, Castro warned.
If there was turbulence in the Chinese financial market, the world economy would be dragged into another crisis, with the emerging economies bearing the brunt, he added.
Some Western scholars believe that an appreciation of the RMB could help expand exports to China, but they have failed to realize that the real driving force behind increases in China's imports is its sustained economic growth and rising living standards of Chinese people, he said.
In that sense, Western countries' action of putting pressuring on China to appreciate its currency is really short-sighted, Castro said.
