European debt crisis deepened experts suggest postponed the timing of the RMB exchange rate adjustment

European debt crisis deepened RMB to stable strain

In the face of European sovereign debt crises continue to spread, some experts believe that the Chinese Government will continue to be deferred to the timing of the Renminbi exchange rate adjustment

■ Reporter Li Yu-Qian

European sovereign debt crises of the haze of the euro also remained weak, "maintaining the status quo" of the current preferred exchange rate policy.

RMB exchange rate adjustment may be postponed

In the Central Bank has recently published the quarterly monetary policy implementation report, official again "a basket of currencies", has been outside of the Central Bank may adjust the RMB exchange rate in the near future. But the face of European sovereign debt crises continue to spread, some experts believe that the Chinese Government will continue to be deferred to the timing of the Renminbi exchange rate adjustment.

Because the European debt crisis for China's economy adverse impact, the first is to export industries, while if the RMB exchange rate adjustment, no doubt exacerbate such adverse effects.

Commerce Department spokesman Yao Jian in routine briefing said that although China and Greece's trade in EU trade accounts for only a small percentage, but the overall economic situation in Europe is also affected by the sovereign debt crises of the drag. It was predicted by sovereign debt, this year the euro area growth of only 1 per cent to 1.5 per cent level. But the EU is China's largest export market, China trade size of 16 per cent, on the whole of China's exports.

Moreover, European sovereign debt crisis is shaking the stability of the euro. Data show that the international foreign exchange market continued to decline against the US dollar euro, the currency is the "passive" against the euro's appreciation.

Euro against the RMB exchange rate since 5 may start again goodbye "9"-prefixed, return to the era of "8". 5 months, euro for the Renminbi exchange rate in just six months has been devalued 5.6 per cent. This year, as of May 14, the cumulative renminbi appreciation against the euro has reached 14.5 per cent.

CITIC Jiantou Chief macroeconomic research fellow, Wei-chun interview, believes that the euro area is China's major export market, the most important trade partner of the euro in 5 months appreciation 14.5 percent will give China's exporters enormous cost pressures on trade policy adjustments.

Although April China monthly trade surplus go negative is positive, but subject to European sovereign credit crisis may be caused by external demand shrinks, the euro depreciated, European importers for trade credit capacity decrease factors such as the second half of China's export growth rate, is full of uncertainty. These factors may be making monetary policy authorities on the Renminbi exchange rate adjustments continue to take a wait-and-see attitude.

The analysis also stated that, since the beginning of 2010, the appreciation of the Renminbi exchange rate had reached 6%, reduced the Yuan against the dollar by urgency and European sovereign debt crisis, falling prices of resource products, thus for China, enter-inflation pressures may also be reduced.

RMB exchange rate flexibility of good timing?

RMB revaluation expected once strong, but because the trade surplus shrank, the appreciation of the Renminbi exchange rate and the European sovereign credit crisis, the market's appreciation of the Renminbi has had the time of judgment.

The view was expressed that the European sovereign credit crisis broke out, has diminished over the short term for the reform of the Renminbi exchange rate flexibility, you need to let the RMB exchange rate flexibility of the negative impact of China's economy.

However, the Chinese Academy of Social Sciences Institute of world economics and politics, Deputy Director, international finance, Zhang interview, said that at present is the Renminbi exchange rate regime, the best time for flexibility.

In his view, in RMB external pressure sloped, happens to be RMB back to a managed floating exchange rate system for the best time. If this issue continues to shrink from watching, then once the European sovereign credit crisis the dust settles, United States Congressional midterm elections approaching, the Renminbi exchange rate may be at a new round of greater external appreciation pressure. RMB exchange rate mechanism flexible sooner rather than later.

Zhang said that during the market expected to occur in the differentiation of the implementation of the RMB exchange rate mechanism of the flexible, able to play a surprise effect and to reduce the exchange rate mechanism flexibility after the Renminbi appreciation pressure. Given the current stock market also in substantial consolidation, China asset prices more attractive to foreign speculators, therefore the Renminbi against the US dollar nominal exchange rate appreciation of small is not enough to attract a large number of short-term international capital flows.