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Unformatted text preview: I 14 China Lets 7 5
A; Bit Fa-Ster By KBITH BRADSHBR HONG KONG — Chinas cur-
3rency rose steeply against the
‘dollar this week, feeding spec-
ulation that Chinese authorities,
yielding to international pressure
and economic realities at home,
were allbwing their currency to , appreciate more rapidly. The currency, knOWn as the
yuan or renminbi, ‘rose 0.9 per-
cent this week — faster: than oyer
any week since China stopped
peggin'g it to- the dollar on July 21,
2005. Thursday, the yuan rose
0.37 percent, the largest pnefday
increase since the peg ended; On-
Friday, it rose 0.18 percent, to
clOs’e at 7.3041 to the dollar in
Shanghai trading ‘ .Yao J mgyuan the chief econo-
mist of the National ‘Bureau of
Statistics in- China, sald. Chinese 1 officials were trying to figure out
their next currency move. ‘1‘“ ‘ “It is certain that thé' yuaﬁgwill . appreciate — the time frame and
magnitude of the adjustment is
difficult to Conﬁrm at the current
time. We are busy studying this
issue right now,” heisaid in a tele-
‘ phone interview. “What I can say '
is that it will be dependent on
’China’s loyerall etcnomic envi- nonment and outlook.” ,
_ Yu Yongding, the director of
‘ the Institute of World Economics
: and Politics at- the Chine'se Acad- .
emy of Social Sciences and ﬁnd]
last year a member of themone-
.' tary policy committee of China’ 5
central bank, said that rising in-
ﬂation at home was making it‘ ,
» much easier for the Chinese gav-
er'nme'nt to accept a stronger
, Until recently, the goyernrnent
worried that allowmg the cur-
'rehcy to rise would let in more
. imports and stiﬂe exports, lead-
ing to deflation. But China" s cOn- ,
sunl'er price index was up 6.9 per-
' ' ‘ (‘nnh‘nued on Portal! ‘ v- --- .a' _‘ From First Business Page ‘y 1
cent in November compared with a year earlier, led 11y an 18. 2 per-
.cent rise infood prices.- ‘ A sustained appreciation oi the '~ yuan could ease frictions some what with the United States, the ’
European UniOnvand Japan, all of '
Which have criticized" China for" not allowing faster appreciation.
. To be sure, trade tensions
could still increase if economies / . around the globe slow next year. 3,1
'And China has periodically al-- l lowed bursts of yuan apprecia:
' tion' in the past —— although not on __the scale or this week’s move — “‘
‘. only to pull the yuan down slight- _' I
1y or held it nearly level for weeks ‘ " afterward. ' and Mr. Yu are the latest in a se— ' . ries of hints from current and for-N, ‘ ,
nier officials that suggest the -
country’ s leadership ls’begmnmg‘ '
'to see some advantages to aﬂ stronger currency ‘ On Thursday, the newspaper ,
1 5 China Securities Journal reports f ' ed that Ba Shusong, a deputy di- -
rector at the government 5 elite, I
Stat, e‘Council Development and ,
Research Cen e1:,' had called for
Tyuan appremauon to slow the.
‘ 117, _e of food andefuel prices China 5
';1mports half of its oil, but rela—_ rively“ little (if its food. And on
AMonday, a newspaper in Shen-
zhe'n reported that central bank 3 the yuan’s value,"
quick Jump; is that it', v" —v-v vw- - \‘2 ' uh . pour’more money into China in
an effort to ride‘ the increasing, value The country’ s foreign ex— ) change reserves are already ris- '
‘ ing by roughly $1 billion a day, -
1 ‘ mainly because of a trade surplus that has continued to grow de- ‘ spite a 7 percent increase in the
yuan against the dollar this year.
,. By comparison, the yuan rose
just 3. 3 percent against the dollar in 2006. / Mr. Yu said that China has he‘-
come less attractive to specula—
tors. He pointed to the ranking of
China s stock markets as among
the World’s costliest in terms of
price-to-earnings ratios; limits . and The yuan rose 0.9 percent this week, faster than overany weekrsir 1 1
on foreign investments in already
high-priced real estate markets;
restrictions 1111 foreign
mOney entering domestic money
markets , , Hang Liang,‘ a Goldman Sachs economist based in ”Hong Kong, expects faster appreciation next
year but not a One-time revalua-
tion.~ ’ Bloomberg News found that ‘
the median estimate of 28 ana?
lysts Was for the yuan to reach
6 88 to the dollar next year; that _ would mean a further 1ncrease of 6 2 percent frOm the close Friday
Stock markets fell across Chi-
na Friday, partly in reaction to — vvr -vv — v"- _ 2February of
But it jumped .24 per-I V experienced such'st/r’o
f that they were able each year _
' ' But this worry Seems to be
‘ abating as exporters have shown
their ability to thrive even with
Currency appreciation, with Chi—‘
.nese exports 22.8 percent higher
laSt month than a year earlier. , Until very reCently, the third
, obstacle to a muCh stronger y‘uan ‘ has been the danger that it would
Thursday’s stock» market drop on that an ever more valuable yuan lead to cheap food imports that Wall Street but also on the pros-1 will result 111 narrower profit mar— would drive down the prices real-
pect that a stronger Chinese cur- gin's. Chinese factories also fate ized by China s farmers This has
rency could narrow profit mar— higher coSts after Jan 1 as a new been'particul‘arly important be! '
gins for many Chinese eitporters. labor law takes effect that could cause many offici‘als,;from mesh
The Shanghai A share index de- make it much harder to dismiss ~ dent Hu Jintao on down want to ,
'clined 0 89 percent, the Shenzhen less productive employees -— ai- narrow the gap between rural
A share index fell .0 45 [percent though it is unclear how strictly and urban 1ncomes _ '
,and the Hang Seng Index in the law W111 be enforced. - 1 Higher toad prices have bane.
"Hang Korig plunged 17 percent. , 9‘1 But after years of having their rﬁted many peasant farmers this 9 Opposition to faster yuan ap- prices beaten down by Wal- Mart year, increasing their incomes as ,.
'precia‘tion has Come from three and other big corporate buyers they sell their crops for more
directions in China, according to Chinese factories have discOv— money Not all peasants have
Chinese political and currency ered this year that they can push gained however as’ Part of the m-
experts.‘ ' through pr1ce1ncreases - :1 .4 flation has occurred because of
. The most Vocal bloc consists of The Bureau of Labor Statistics an epidemic among Chinese pigs
experters and their allies in the price 1ndex for Amer1can1mports , as well as drought in areas of
erce ministry, who Worry from China fell, steadily from ‘ southern China r _i _ __ .LM- ,2 nee China stopped pegging it to the d9‘llar on July 21, 20Q5.' ...
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