Rising of yuan alone is not enough for economic problems

As chief economist of IMF, Blanchard said recently that, renminbi could not cope with all world economic problems including that of <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />America, even if appreciated. <?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

Estimated by IFM, renminbi and other major Asian currencies, if raised by 20 percent, could help the growth of American export to count for just one percent of its GDP only.

Blanchard indicated even displayed in this estimation, the rapid rise of Asian currencies was not the panacea to stimulate the growth of American economy; anyway it might give help to other countries’ recovery.

He said, “It’s very important that developed countries should not make excessive reproaches on renminbi issue. What China ought to do presently is to drop its saving rate and to make productions in line with its domestic demand; actually China is just striving for this intention.”  Based on this, it would only have senses to have renminbi revalued and avoid over-heated economic growth by optimizing resources, thus bringing benefits both to China and the world. 

For a period of time IMF has made remarks on renminbi for its  lower  rate, and the idea was stressed again last week by Kahn, the head, saying that yuan is indeed undervalued.