Yesterday I wrote about Chinese CEOs calling for China to bring its currency up to market rates. Today Chinese economists are joining the call.
Chinese economist Gong Shengli, in his book, China is Very Happy, calls for a strong yuan,
“In order for China to survive and to continue developing, it is imperative that the renminbi goes global,” says Mr Gong. “That means it is absolutely necessary and inevitable that the currency should appreciate.”
From the Financial Times story,
A small but prominent group of economists at the Chinese Academy of Social Sciences has been pushing in recent months for a sizeable appreciation of the currency. In an article published this year, Zhang Bin called for a 10 per cent rise and greater flexibility in daily trading limits in order to give the authorities more control over monetary policy and to restrain inflation.
“There is a very urgent need” for reform of the currency system, he wrote.
Zhang Shuguang, another Cass researcher, said a stronger currency was needed to boost China’s services sector and reduce the emphasis on exports.
The fact is that this currency imbalance distorts everything in the world economy. Chinese consumers face a barrier of up to 40% keeping them from being able to buy goods produced outside of China. Chinese businesses face the same problem. Meanwhile the rest of the world continues to lose jobs, factories and purchasing power.
On April 15 the President must declare China a currency manipulator and take the necessary steps to being to remedy the problem.
