& çâÌæÚUæð´ ·¤è ¥ôÚU Îð¹Ùæ ÁæÚUè ÚU¹ð´ ¥ÍæüÌ ¥ÂÙð ÜÿØ ÂÚU ŠØæÙ ÚU¹ð´Ð ãæÚU Ù ×æÙð´, €UØô´ç·¤ ·¤æ× ·¤ÚUÙð âð ¥æÂ·¤ô ©gðàØ ·¤è Âýæç# ãôÌè ãñ ¥õÚU ÁèßÙ ·¤æ ¹æÜèÂÙ ÎêÚU ãôÌæ ãñÐ ÖÜð ãè ÁèßÙ ×ð´ ç·¤ÌÙè Öè ·¤çÆÙæ§ü €UØô´ Ù ¥æ°, çÁ™ææâæ ¥õÚU ©ˆâæã ÕÙæ° ÚU¹ð´Ð ŠØæÙ ÚU¹ð´, ÜÿØ ã×ðàææ ¥æÂ·Ô¤ Âæâ ãôÌð ãñ´ çÁ‹ãð´ ÂæÙð ·Ô¤ çÜ° ÂýØæâ ¥æÂ ·¤Öè Öè àæéM¤ ·¤ÚU â·¤Ìð ãñ´Ð

CURRENCY

Chinese yuan yet to see equilibrium

Xinhua, Beijing
The yuan, the Chinese currency, has appreciated more than 20 percent against the greenback since the country dropped its peg to the US dollar with a one-off two-percent revaluation exactly three years ago.
The central parity rate of the yuan, or renminbi (RMB), was set at 6.8271 yuan against the dollar on Monday after peaking at 6.8128 last Week, according to the China Foreign Exchange Trading System.
Both represented a 21 percent rise against the dollar compared to 8.2765 yuan per dollar before the depegging, announced on July 21,2005.
Let's see what's ahead as well as the route of the yuan's appreciation over the past three years and its impact on the economy and normal people.
Many critics from outside China said the government had kept the currency undervalued by at least 20 percent to give its exporters an advantage in the world market, when the country took the move.
With the yuan now nearing 6.8 yuan against 1 dollar, analysts started to ponder on the equilibrium prices of the yuan, especially as the national economy slowed in the first half and anticipation for the yuan's continued bilateral appreciation began to ebb.
Many believed the yuan would continue its upward motion in the near term, but there may be expectations for its depreciation as early as the end of this year.
They said the yuan's exchange rate was gradually approaching its equilibrium and could eventually become a truly flexible currency moving in both directions.
China's trade, at present, contributed about 5 percent of the GDP.
The latest statistics showed China's GDP rose 10.4 percent in the first half over the same period last year, 1.8 percentage points lower than the first half last year.
Back in July 2005, the Chinese economy was in the third year of high growth following two years of double digit growth; the country's foreign exchange reserves topped 700 billion US dollar at die end of June as a result of galloping trade.
The economy, though showing no sign of a slowdown, was challenged by a sudden surge of trade disputes with other countries. This followed a pick-up in trade surplus growth and increasing criticism accusing China of being a big consumer of the world’s resources such as cement and steel.
China's currency was maintained at a fixed rate against the dollar before the 2005 revaluation.
In July, the country ended the currency's peg to the dollar to adopt a more flexible exchange rate mechanism. Since then, the yuan's refer ence rate has been set against a currency basket that also includes the euro, yen, won and British pound.
The news was applauded by many countries including the United States, the United Kingdom, Japan and the Republic of Korea, given China's rising power.
Statistics showed China's GDP rose to 3.28 trillion US dollars in 2007, up from 216.5 billion US dollars in 1978 when the country’s initiated its opening-up reform.
The country is now the fourth largest in the global economy, the third largest trading nation and the world's biggest holder of foreign exchange reserves.
Since the revaluation, the country had gradually furthered its exchange reform to allow the market to play a bigger role.
These measures included widening the floating band of currency against the dollar and other major currencies on the spot market and relaxing controls on foreign exchange held by individuals and companies.
The yuan exchange rate has become a hot topic among the public over the past three years since the currency began to appreciate against the dollar, in contrast to the lukewarm response back in 2005.
This was a result of Chinese citizens getting more involved with the outside world to purchase imported products or to go abroad to study and travel; a rising yuan meant bigger purchasing power for them.
National Tourism Administration statistics showed that about 40.95 million Chinese went abroad last year, 32 percent more than in 2005.
The rising yuan against the Hong Kong dollar also created a shopping craze among mainland tourists to the Special Administrative Region; Hong Kong residents, in tandem, became enthusiastic about holding yuan deposits.
The exchange reform would no doubt promote the country's economic restructuring, or the industrial upgrading and a shift from the heavy reliance on resources and energies for growth.
But exporters suffered as less orders came in and profit margins were squeezed.
Since last year, quite a few exporting companies in the manufacturing hub of the Pearl River Delta area, especially labour-intensive textile producers, went bust or were forced to find new locations.
The rising yuan was cited among reasons that also included increasing labour costs, higher taxes and industrial upgrading.
However, the process seems inevi
table, as seen in other countries, which naturally saw their currencies rise in value after years of growth.
Many companies also sought ways to avoid risks from a rising currency, such as switching the currency in which payment would be made and splitting orders of a long period into smaller ones.
The Chinese economy had scored double-digit growth over the past three years since the yuan revaluated, along with a rising population of newly employed and continuously dropping unemployment rates.
Exports have slowed as expected without experiencing a drastic drop.
The economy seemed to go in the right direction with consumption on the rise to make bigger a contribution to the economy and exporters shifting to turn out better products amid wide-ranging industrial restructuring.
But decision makers had to throw caution against many factors, including the global slowdown and the
international financial market turmoil that originated in the US as changes in the rates of major currencies and global prices of energies and grain would both affect the movement of international capital.
Some analysts said the accelerated influx of international capital posed new threats to China's macro control, with the country struggling to tame liquidity.
Some warned the government of the negative effect of a rising yuan, such as harm to exporters, and said the country should take measures to avoid an economic slope.
Others noted the financial risks following the yuan's depreciation, such as the outflow of a large amount of capital.
However, economists agreed the country's current exchange policy was appropriate in addressing the imbalance of international payments. and measures had been effective, as seen from the decelerating trade surplus.