Beijing – THE International Monetary Fund (IMF) still sees China’s economy expanding 10 per cent this year.
‘The current financial crisis, which began in the United States housing market, is spreading to affect the real economy in the US and elsewhere,’ IMF managing director Dominique Strauss-Kahn told reporters in Beijing yesterday.
‘There will be some impact on China, but we still expect the economy to expand by 10 per cent this year.’
The World Bank this month cut its forecast for China’s growth to 9.6 per cent. The world’s fourth-largest economy expanded 11.4 per cent last year, the fastest pace in 13 years.
China is trying to slow inflation that is close to an 11-year high without triggering a sharp slowdown.
‘It’s even more necessary than before to have high growth in China,’ the IMF head said, referring to a slowing global economy.
‘More domestic-demand-driven growth will be what China needs rather than export-led growth.’
Mr Strauss-Kahn urged faster appreciation of China’s currency, the yuan, and said the IMF and China agreed the nation still needed a tight monetary policy to contain investment growth and inflation.
He said faster appreciation ‘would be helpful for addressing China’s key economic challenges and would also contribute to preserving global economic stability’.
China’s currency has climbed 1.7 per cent versus the US dollar this year. It traded at 7.181 to the US dollar yesterday.
Mr Strauss-Kahn said that ‘for a number of months now, the real exchange rate is moving in a good direction’.
Source: BLOOMBERG NEWS (The Straits Times 16 Feb 08)