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China to cut debt, boost yuan to tackle inflation

A senior Chinese central bank official proposed on May 21 to allow China’s currency to strengthen as a counterweight to rising commodity prices, wire services report.

Lu Jinzhong, the research director at the People’s Bank of China, wrote that with China “an important commodity consumer in the world, the imported impact from international prices is inevitable.”

Lu added that China should “enhance the flexibility of the exchange rate, and let the renminbi (yuan) appreciate appropriately to offset the imported effect.”

While the United States creates demand at a record peacetime rate through massive deficit spending and ultra-expensive monetary policy, China’s central bank and regulators want to taper credit growth from banks and suppress shadow financing across the economy.

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