World Bank lifts growth estimation Chinese economy
World Bank lifts growth estimation Chinese economy
03-17-2010 20:41
The World Bank, which aims on reducing poverty, has lifted its 2010 economic expansion estimation for the People’s Republic of China (PRC) from 9% to 9.5%. Household consumption and consumption by businesses will increase considerably, despite the fact that the government will withdraw crisis support measures, according to the international financial institution.World Bank
However, the World Bank expressed concerns about the inflation and the property prices bubble. It also prompted China to let the Renminbi, an alternative name for the Yuan, to strengthen to contain prices and to prevent that the economy overheats.Inflation
The bank stated in the quarter on quarter report regarding the world’s most-populous nation: “Appreciating the Yuan may result in less inflationary pressure and may stabilize the economy. Wen Jiabao, the Chinese premier, acknowledged that inflation would be a difficult task as the government strives to continue the economic growth. Nevertheless, he denied that the world’s third largest economy was consolidating the low rate of the Yuan to enhance exports. Furthermore, the Chinese premier noted that maintaining the currency stable essentially contributed to the worldwide revival after the economic crisis.Chinese Yuan
The Chinese Yuan was pegged to the Greenback until 2005, followed by an appreciation of approximately 20%. In 2008, the Yuan was tied again when the worldwide economic slump declined demand for products from China and industrial plants started closing.China is under pressure, especially from the US, to let the Chinese currency appreciate. An unfair advantage for China is the result of not revaluating the Yuan and keeping it artificially low, according to economists.
Appreciation of the Yuan
Dominique Strauss-Kahn, managing director of the International Monetary Fund (IMF), stated today that the Yuan was extremely underrated. “An appreciation of the Yuan would be a logical result of stabilizing the global economy. It’s inevitable that some currencies need to be revalued, which is a renowned issue in China with regard to the rate of the Yuan,” he explained the European parliament’s economic affairs committee in Brussels.The Chinese gross domestic product increased 8.7% last year, while the government officially targets on a 8% growth.
