Chinese currency not to be devalued, says economist
( 2002-03-04 09:48) (China Daily)
Fears over a possible devaluation of renminbi yuan were allayed by a senior Chinese economist on Sunday.
Instead, Professor Xiao Zhuoji of Peking University praised the stability of the Chinese currency.
Xiao, however, didn't rule out the possibility of another bank interest rate cut for renminbi this year, even though the present economic situation made it look unlikely.
The People's Bank of China cut interest rates both on loans and deposits on February 20, amid warnings of a slowing economic growth. It was the eighth interest rate cut announced by the central bank since May 1996.
"Whether there is a need for further interest rate cuts will be determined by the economic performance in the second half of this year," Xiao said. "But I personally think there will be little room for another fall in interests, given the current economic situation."
The professor said another cut would hardly boost economic growth because the renminbi interest rate had almost reached a record low.
The government is pinning great hope on interest rate cuts to stimulate domestic demand to largely offset the sharp fall in exports.
But the first seven interest rate cuts played a much smaller role than expected in getting consumers to spend more.
Xiao is attending the on-going Fifth Session of the Ninth Chinese People's Political Consultative Conference National Committee. He said renminbi's value would be kept stable despite the mounting pressure of the falling Japanese yen.
He sounded confident because of two factors: stability of renminbi's exchange rate against the US dollar and the absence of any sign of deflation in the country.
What about the long-awaited establishment of the second board market? Xiao said preparations were still under way but did not specify when they would be over. "The main problem is the preparatory work, which will take a long time," said the professor.
Zhou Xiaochuan, chairman of the China Securities Regulatory Commission, had earlier said that the high-tech board's launch had been put off indefinitely. Shenzhen has been preparing to launch the second board market ever since 1999, when the idea of propelling high-tech firms' development through venture capital was raised at the National Science and Technology Conference.
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