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  • » 12/30/2009, 00.00

    CHINA

    To continue growth, China refuses to reevaluate the yuan



    According to official data industrial profits are recovering. Premier Wen says now necessary to contain inflation, especially in real estate, and that a "stable" Yuan is beneficial for the world economy. Meanwhile, the government can not even contain corruption.

    Beijing (AsiaNews / Agencies) - China says that in 2010 it aims to keep inflation at levels "reasonable", even curbing rising rapidly property prices and "resisting" pressure to revalue the Yuan. This was the content of an online interview given by Premier Wen Jiabao to the official state Xinhua news agency on 27 December. Meanwhile, Zhong Shan, vice-Minister of Commerce, has estimated that "probably" in 2009 China will become the world’s largest exporter overtaking Germany.

     

    The country fears the return of high inflation, which was announced by increases in the prices of raw materials, and in November, consumer prices rose by 0.6% after 9 months of deflation. Fro this reason Wen said that the conditions to revalue the Yuan “are still missing”. The United States and European Union accuse Beijing of keeping the currency artificially low to encourage the sale of its goods to the detriment of those of other countries. But Wen insists that "a stable Yuan has made an important contribution" to global economic stability. China always insists that the low prices of its products are a great help to the family economies of other countries.

     

    The premier added that it would be "a mistake" to remove the strong state funding provided to businesses too quickly. In the first 11 months of 2009, Beijing has provided funding for 9,200 billion Yuan (over 920 billion euros) to support companies in crisis, following the collapse of exports. Zhong has indicated as "probable" that "China will overtake Germany as the largest exporting country”, although its sales abroad decreased by 18.8% according to official data, the maximum decline by at least 30 years. The National Bureau of Statistics said that profits for the industrial companies still rose by 7.8% in November 2009 from a year earlier. Although this data raise concerns among experts, given that from January to August, the NSB had indicated a loss of 10.6%.  

     

    Other experts note that these statistics are not verifiable and that China, to combat the global crisis, needs to face major changes in its internal system, with less room for state-owned enterprises and greater administrative transparency. Yesterday the Central Investigation Bureau said that in 2009 public officials have stolen or misused 234.7 billion yuan (about 23.5 billion euros). Each year, the Inspection Office announces that it has identified dozens of dishonest officials and the government declares zero tolerance against corruption. But the situation is not improving Liu Jiayi chief inspector said yesterday in a conference, that "despite some improvements, theft of funds, waste and falsification of tax information still exists in the central offices”.

     

     

    Moreover, the Office for inspection has not indicated the names of those responsible, who Beijing often prefers to charge in secret and without making the news public.

     

     

    Wen expressed particular concern about the rapid increases in property prices "in some zones" and announced his intent to "stabilize" them especially with interventions "on taxes and interest for loans”, but also with the construction of low price housing in order to counter speculation making it less attractive for investments.  

    In November, property prices in 70 major cities rose by 5.7% compared to November 2008, a record increase from July 2008. Experts believe there is a real property bubble.  

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    See also

    12/07/2008 CHINA
    Regular wage hikes planned in Guangdong
    The authorities want to avoid the impoverishment of low-income households from inflation, but employers fear labour costs are already too high. Meanwhile exports drop as direct foreign investments rise. For experts this trend could lead to speculation.

    11/08/2010 CHINA
    Industrial growth slows and inflation rises in China
    The data released today by the Ministry of Finance worry the U.S. and analysts. Inflation at 3.3% (against 3% threshold set by the Government), while exports increase. Washington sees appreciation of Yuan as only solution.

    09/05/2008 CHINA
    Record rise in production costs, China's economy slows
    Energy, food, and raw materials (especially metals) cause the greatest rise in production costs in three years. Meanwhile, the countermeasures of the government are not stopping inflation, which remains over 8%, in spite of a slowdown in exports and in demand for luxury goods.

    21/02/2011 CHINA
    Manufacturing growth slows down as inflation speeds up
    Exports contract, domestic consumption grows and the yuan hits historic record against US dollar. The People’s Bank of China raises reserve ratio for banks, drawing fire from critics who believe this will deprive it of necessary flexibility without touching inflation.

    11/01/2010 CHINA
    Dangers looming over China's economy in 2010
    A property bubble and inflation could offset last year's huge stimulus package. The economy is expected to grow16 per cent this year. In the first week of January, banks provided loans to the tune of 600 billion yuan.



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