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January 29, 2010 Calls for appreciation of the Chinese currency were renewed Thursday at the World Economic Forum in Davos, despite Beijing's explicit resolve to keep the yuan stable and allow it to float at its own schedule and pace. Jeremy Jurgens, senior director of the Center for Global Growth Companies at the World Economic Forum, said, "The world is very much looking to China to better under-stand how China can stimulate domestic consumption without overheating. At the same time, China can only benefit from a sustainable recovery in the global economy." China is blamed for artificially keeping the yuan weak against the US dollar. A stronger yuan is thought to likely spur a massive inflow of speculative money, making liquidity management more difficult. Zhu's remarks in Davos came as Zhong Shan, China's deputy minister of commerce, admitted that external pressure for the yuan's appreciation is growing, according to a speech transcript on the ministry's website. "The yuan faces relatively intense anticipation for appreciation," Zhong said Tuesday at a nationwide working conference. It has become increasingly difficult to maintain a consistent and stable macro-economic policy, as some of the stimulus plan will undergo adjustment, Zhong said. He made few hints as to whether the yuan would appreciate this year, or in what form. The government shifted to a moderately easy monetary policy in 2009 from a tight monetary policy in 2008 in a bid to counter the adverse impact of the global financial crisis. However, the lending surge and soaring housing prices have caused concerns of the risk of an assets bubble and increasing inflation. China's economy in 2009 registered an 8.7 percent yearly growth, the National Bureau of Statistics said last week. The country's foreign exchange reserves hit almost $2.4 trillion by the end of 2009, up 23.28 percent year-on-year, the central bank said. Yu Yongding, an economist at the Chinese Academy of Social Sciences, noted that the country's economic expansion last year gave strong impetus to the global recovery. "Many Asian nations were beneficiaries of China's massive stimulus plan and fast-growing imports," Yu said. "The world is anxious that the burst of asset bubbles could lead to a collapse of China's economy and the global recovery will lose its key driving force," Yu said, adding that the concern itself may reflect China's increasingly significant role in the world economy. Liu Bin, a Dalian-based economist, noted that time for the yuan's revaluation has not come. "A further appreciation will result in a sharp fall in exports and impact on imports as well. It will hurt the global economy," Liu said. China should not yield to any foreign pressure on the issue, Liu said. (Source from: Global Times)
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