To revalue RMB 'a very grave mistake'
(People's Daily Online)
Updated: 2004-08-29 09:39

--For China to readjust the system of foreign exchange rate and revalue the People's Currency at present will constitute a "very grave mistake" .

--Chinese financial supervision and administration authority should establish a credit appraisal system as soon as possible

--To maintain a stable operation of macro-control economy is of utmost importance to China

Robert A. Mondale, a Nobel economics laureate and famous economist pointed out in Beijing the other day, to maintain a stable operation of macro-control economy is of utmost importance to China. And to revalue Renminbi (People's Currency) or readjust the exchange rate system will pull back the economic growth rate and embed a hidden danger for the long-term economic development in future.

At the press conference of the 2nd International Finance Annual Forum held in Beijing, Mondale expressed his aforesaid point of view. He said, for China to readjust the foreign exchange rate system and revalue the Renminbi (People's Currency) at present will constitute a "very grave mistake". China should continue to practice the fixed exchange rate by following closely that of the US dollars.

Mondale said that at present what concerns him most is the continuity of the macro-control economic policy in China and the reform progress of the Chinese banking industry. The Chinese monetary and financial supervision and administration authority should set up a credit appraisal system as soon as possible so as to help the Chinese banking industry enhance the ability in risk management and speed up the process in the treatment of the non-performed bank assets.

During the past 25 years, China has achieved a great deal in economic development, expressed Mondale. The economic growth rate has already hit the fastest record of the 25 years. He said, two years ago, nobody would pay any attention to the role of China in the world economy nor was it possible to talk about the Chinese currency and its exchange rate policy. However, two years afterwards, more and more people are now coupling the world economic development with the soaring economy in China, and many of them are of the opinion that the development of Chinese economy has exacerbated the economic competition in the world.

Mondale said, "somebody criticized a year ago that China has exported devaluation to the world, holding that China should adjust its exchange rate policy and revalue Renminbi, but a year later someone is once again censuring that China has exported revaluation. However, I'm of the opinion that in an essential point of view, the occurrence of such a misunderstanding finds, to a great extent, its root-cause in the very big price-rise of the crude oil and other materials in the world."

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