The World Bank yesterday urged China to let its currency rise to contain inflation and stop the economy overheating, predicting that growth would gallop ahead at 9.5 percent this year.
“Strengthening the exchange rate can help reduce inflationary pressures and rebalance the economy,” the World Bank said in its latest quarterly update on the world’s third-largest economy.
China is facing growing international pressure, particularly from the US, to let the yuan appreciate. It has been effectively pegged to the dollar since the middle of 2008.
US senators on Tuesday introduced legislation that would impose tough new penalties on China if it failed to revalue its currency, which they say Beijing keeps artificially low to secure an unfair edge in trade.
The US action follows Chinese Premier Wen Jiabao’s (溫家寶) insistence at the weekend that Beijing would resist any foreign pressure for a stronger yuan, currently pegged within a narrow range at about 6.8 to the US dollar.
“Inflation expectations can be contained by a tighter monetary policy stance and a stronger exchange rate, while monetary policy also has a key role to play in containing risks of asset price bubbles,” the World Bank said.
The bank projected China’s GDP would surge 9.5 percent this year, markedly higher than the government’s own target of around 8 percent and last year’s growth rate of 8.7 percent.
Recovering demand for Chinese exports and robust real estate investment will be the key drivers of the economy this year as massive government-backed spending slows, it said.
While inflation risks remained modest, the bank said containing inflationary expectations, reining in property prices and keeping local government debt “manageable” were key tasks for policymakers.
In Washington, US Treasury Secretary Timothy Geitner said that the Senate bill calling for stiff trade sanctions if China does not act was a sign of how strongly China’s trading partners feel about the issue.
China, however, said yesterday that focusing on the yuan would not help solve problems in Sino-US bilateral trade relations.
“We oppose the over-emphasis on the yuan’s exchange rate,” a Chinese commerce ministry official said. “The yuan’s exchange rate is not a magic potion for solving global economic imbalances.”
A Chinese freighter that allegedly snapped an undersea cable linking Taiwan proper to Penghu County is suspected of being owned by a Chinese state-run company and had docked at the ports of Kaohsiung and Keelung for three months using different names. On Tuesday last week, the Togo-flagged freighter Hong Tai 58 (宏泰58號) and its Chinese crew were detained after the Taipei-Penghu No. 3 submarine cable was severed. When the Coast Guard Administration (CGA) first attempted to detain the ship on grounds of possible sabotage, its crew said the ship’s name was Hong Tai 168, although the Automatic Identification System (AIS)
An Akizuki-class destroyer last month made the first-ever solo transit of a Japan Maritime Self-Defense Force ship through the Taiwan Strait, Japanese government officials with knowledge of the matter said yesterday. The JS Akizuki carried out a north-to-south transit through the Taiwan Strait on Feb. 5 as it sailed to the South China Sea to participate in a joint exercise with US, Australian and Philippine forces that day. The Japanese destroyer JS Sazanami in September last year made the Japan Maritime Self-Defense Force’s first-ever transit through the Taiwan Strait, but it was joined by vessels from New Zealand and Australia,
CHANGE OF MIND: The Chinese crew at first showed a willingness to cooperate, but later regretted that when the ship arrived at the port and refused to enter Togolese Republic-registered Chinese freighter Hong Tai (宏泰號) and its crew have been detained on suspicion of deliberately damaging a submarine cable connecting Taiwan proper and Penghu County, the Coast Guard Administration said in a statement yesterday. The case would be subject to a “national security-level investigation” by the Tainan District Prosecutors’ Office, it added. The administration said that it had been monitoring the ship since 7:10pm on Saturday when it appeared to be loitering in waters about 6 nautical miles (11km) northwest of Tainan’s Chiang Chun Fishing Port, adding that the ship’s location was about 0.5 nautical miles north of the No.
SECURITY: The purpose for giving Hong Kong and Macau residents more lenient paths to permanent residency no longer applies due to China’s policies, a source said The government is considering removing an optional path to citizenship for residents from Hong Kong and Macau, and lengthening the terms for permanent residence eligibility, a source said yesterday. In a bid to prevent the Chinese Communist Party (CCP) from infiltrating Taiwan through immigration from Hong Kong and Macau, the government could amend immigration laws for residents of the territories who currently receive preferential treatment, an official familiar with the matter speaking on condition of anonymity said. The move was part of “national security-related legislative reform,” they added. Under the amendments, arrivals from the Chinese territories would have to reside in Taiwan for
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