Appreciating the Renminbi

April 26, 2011 at 7:00 am

Jing Ulrich is Chairman of China Equities and Commodities with JP Morgan. A key speaker at the Hong Kong Asian Financial Forum 2011 in January, Ms Ulrich says increased interest rates and higher reserve requirements for banks will be matched by the appreciation of the renminbi over the next two years. 

What’s your outlook for the Chinese economy?
In 2010, China’s growth rate probably reached 10 per cent. In 2011, we expect China’s growth to slightly decelerate, to about nine per cent. But by any measure, China’s growth will remain robust in the coming year or two. 

Does that mean the Chinese government’s approach to slowing the economy and reducing dependence on exports is working?
It’s beginning to work. Inflation remains one of the main challenges facing the Chinese economy in the coming few months. Inflation comes from several sources. One is food prices. In recent months, we’ve seen agricultural commodity prices rise at a rapid rate. Another source of inflation is basically imported, mainly coming from raw material prices. China is the largest importer of raw material, from oil to iron ore, to coking coal; these raw material prices have been rising very rapidly as well, contributing to domestic inflation.

The third source of inflation is wages. In the last year, minimum wages have gone up by about 23 per cent, contributing to the Consumer Price Index. So in the coming few months, one of the main focuses of the Chinese government is to contain inflation and achieve a more sustainable growth rate for the economy.  Read more.

Hong Kong Trader, 20 April 2011

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Entry filed under: Hong Kong.

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