China Calls Rapid Yuan Rise Impossible

The Ministry of Foreign Affairs on Wednesday commented that yuan appreciation in the near term is out of the question. While the yuan has risen around 30% against the U.S. dollar, Foreign Ministry spokeswoman Jiang Yu asserts that the yuan is close to reasonable equilibrium level. From the Wall Street Journal:

“In the short term, pushing for rapid yuan appreciation is not possible. If Chinese economic growth slows, it will reduce global aggregate demand,” Ms. Jiang said.

In public comments about the issue, Chinese officials have stressed that yuan reform will be gradual, but haven’t explicitly said that rapid appreciation is off the table.

Standard Chartered economist Stephen Green projected Tuesday that the yuan’s appreciation against the dollar will slow to 3% to 4% in 2012 from 5.5% in 2011, due to China’s slowing economic growth.

On Wednesday, Bank of America-Merrill Lynch economist Lu Ting said that due to recent dollar strength, the yuan has actually appreciated by 4.1% against a broader basket of currencies since the end of July.