China to stick with tight monetary policy
China will stick with a tight monetary policy as the nation faces increasing pressures of inflation and over-investment amid global market turmoil.
By Bloomberg |
WASHINGTON: China will stick with a ���tight��� monetary policy as the nation faces increasing pressures of inflation and over-investment amid global market turmoil, said central bank chief Zhou Xiaochuan. China needs to correctly handle the "pace, focus and magnitude of macro-economic controls to avoid large fluctuations and maintain stable and relatively fast economic growth," People���s Bank of China governor Zhou said during the IMF meeting.
China, the world���s fastest-growing major economy, is trying to prevent a flood of cash from the trade surplus and foreign investment from fanning inflation that is already at an 11-year high. The nation has accelerated the yuan���s appreciation this year to ease pressure on inflation.
The currency has strengthened 4% against the dollar this year, bringing the yuan���s advance to 18.4% since the end of its peg to the dollar in 2005. The currency closed in Shanghai on April 11 at 7.0065 per US dollar.
"The exchange-rate has limited impact on adjusting the trade imbalance," Mr Zhou said. "Over-exaggeration of its function is not only impractical but will also misguide the course of such an adjustment."
China, the world���s fastest-growing major economy, is trying to prevent a flood of cash from the trade surplus and foreign investment from fanning inflation that is already at an 11-year high. The nation has accelerated the yuan���s appreciation this year to ease pressure on inflation.
The currency has strengthened 4% against the dollar this year, bringing the yuan���s advance to 18.4% since the end of its peg to the dollar in 2005. The currency closed in Shanghai on April 11 at 7.0065 per US dollar.
"The exchange-rate has limited impact on adjusting the trade imbalance," Mr Zhou said. "Over-exaggeration of its function is not only impractical but will also misguide the course of such an adjustment."
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