Canadian economist says China's reaction to yuan appreciation pressure not strong enough

Canadian economist says China's reaction to yuan appreciation pressure not strong enough

Reaction by China to U.S. pressure on the appreciation of Renminbi, or China's currency yuan, was not strong enough, a Canadian economist said here Wednesday.

John Whalley, distinguished fellow of the Centre for International Governance Innovation of Canada, made such remarks at a symposium on China's poverty and policy response.

"It is a political game, which is more complicated than it looks," said Whalley.

China had done a great job in leading the global economic recovery which benefited the world. The U.S. was threatened by China's growth, however, cooperation not pressure on China was needed, said Whalley. China's shrinking trade surplus should not be neglected, he added.

Statistics from the Ministry of Commerce showed that China's exports dropped 16 percent in 2009, while imports dropped 4.8 percentage points lower than exports. The trade surplus declined 34.2 percent for the whole year.

In the first two months this year, imports outpaced exports by 32.2 percentage points to grow 63.6 percent year on year. The trade surplus slipped 50.5 percent, according to Yao Jian, a spokesman for the commerce ministry.

The value of the Chinese currency has risen 21 percent against the U.S. dollar in the past five years.

"If China's growth rate was hindered by the currency rate issue, say the country's growth rate dropped to 5 percent, it would be a catastrophe, not only to China, but also to the world," Whalley said.

The symposium was co-organized by the Institute of Quantitative and Technical Economics of the Chinese Academy of Social Sciences, the government think tank, and the Poverty & Economic Policy Research Network (PEP) of Canada.