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Mundell: US calls for RMB rise a move to slow China's expansion

(Xinhua)
Updated: 2007-06-24 08:37

Professor Robert Mundell, widely dubbed "father of the Euro", said?in Beijing?Saturday that constant pressure from the United States on China to appreciate its currencyRenminbican be interpreted as "a move to slow China's expansion".

The 1999 Nobel Prize winner foreconomicsmade the remarks when he was giving a lecture to a group of Chinese business leaders.

According to Mundell, China's current account balance is only a small factor in the US deficit problem.

Even though it represents only 10 percent of the US deficit China is being picked on by the United States because "China is a resurgent power."

The economist said China had created a competitive shock in the world economy through its manufacturing successes. As its share of world exports continues to rise, resistance and protectionism have appeared in the West.

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Commenting on China's contribution to the world economy, he said the fact that China is importing more is helping to stabilize the world economy during the global slowdown and that consumers have benefited enormously from "Made in China" goods.

China's economy has some major problems to solve, according to Mundell.

He said macroeconomic issues such as rural poverty and massive migration to the cities have to be carefully managed.

The Nobel prize winner noted that China's future economic growth will be driven by factors such as high savings, strong export growth andforeign direct investment, and adequate foreign reserves.

Meanwhile, catch-up technology, increasing imports, the application of the latest technologies and a competent and virtually limitless labor force will also play big roles.