By Bloomberg News
Oct. 20 (Bloomberg) -- Chinese central bank Vice Governor Ma Delun warned that monetary-policy challenges will increase as expectations for a stronger yuan boost inflows of capital.
As global markets revive, “capital flows increase and the U.S. dollar weakens, there will be an expectation for the yuan to appreciate, leading a large amount of international capital to return,” Ma said at a business forum in central China’s Zhengzhou city today.
Inflation pressures are building and policy makers need to rein in the effects of extra liquidity on asset and consumer prices, Ma said. Government stimulus and a record $1.27 trillion of new loans in 2009 are driving China’s rebound, raising the risk that the recovery will come at the cost of asset bubbles and rising prices.
“Challenges will increase,” Ma said in a transcript of his comments, posted on www.sina.com.cn.
A recovery in exports may add to the cash in the economy, after overseas sales fell 15.2 percent in September, the smallest drop in nine months. The nation’s foreign-exchange reserves climbed to $2.273 trillion last month.
“China’s international payments will remain in surplus in the short term, and a large trade surplus may continue as exports recover,” Ma said.
Policy makers halted the yuan’s gains versus the dollar in July last year after a 21 percent appreciation in the previous three years. The Chinese currency traded at 6.8268 per dollar as of 4:54 p.m. today.
Economic growth rebounded to 7.9 percent in the second quarter from 6.1 percent in the three months through March, the weakest pace in almost a decade. Third-quarter growth was stronger, Ma said, citing a preliminary estimate. That number will be released on Oct. 22.
--Li Yanping. Editors: Paul Panckhurst, Sandy Hendry.
To contact Bloomberg News staff for this story: Li Yanping in Beijing at +86-10-6649-7568 or yli16@bloomberg.net
Posts
No comments:
Post a Comment