Is Beijing currency balance heading China in financial trouble?
Beijing told currency rise would balance trade A STRONGER currency would help China curb its record trade surplus and meet a goal set by Premier Wen Jiabao of shifting economic growth away from exports and investment, the World Bank said in a report. “A stronger exchange rate could dampen domestic growth and address the current account surplus at the same time,” the bank said yesterday in a quarterly report on the Chinese economy presented in Beijing. It would also encourage investment in services rather than manufacturing, the report said. Mr Wen has called the surplus one of China’s biggest economic “problems” because it is flooding the economy with cash, complicating efforts to slow lending and investment. China’s reluctance to allow faster yuan gains worsens the trade imbalance and encourages companies to invest more, the World Bank said. “A stronger exchange rate helps bring about desirable expenditure switching,” the report said. Faster gains would also help curb inflows of forei
