China should stabilize the exchange rate of RMB against the US
dollar to study the effect of its accumulated appreciation of close
to 10 percent over the past two years, 1999 Nobel Laureate in
economic sciences Robert Mundell said here on Wednesday.
Speaking at a lecture at the Chinese University of Hong Kong,
Mundell said "it is time to pause the appreciation of RMB and let
it stay at a stable level."
China abandoned its policy of pegging the RMB to the US dollar
in 2005 and the currency's exchange rate against the dollar has
rose close to ten percent since then.
Refuting an argument that says the RMB is undervalued, thereby
leading to the US trade deficit, the father of the euro cited
figures to note that China's trade surplus against the United
States only contributed a small portion of the US deficit.
Number megatrends in the world economy, including the
unprecedented global expansion, globalization, the IT revolution,
the success of the euro, the rise of China, among others, have led
to "global imbalances, reflected in a huge current account deficit
of the United States," Mundell said.
The dollar deficit is "endemic in the dollar system" and cannot
be explained by the fixed rate of the RMB or the Japanese yen,
Mundell said, adding that the dollar deficit has persisted since
the end of the dollar shortage in the 1950s.
The 2005 Nobel Laureate in economic sciences Thomas Schelling,
along side Mundell at the Chinese University of Hong Kong, lectured
on nuclear nonproliferation, and Edmund Phelps, winner of the 2006
Nobel Prize in economic sciences, lectured on the importance of
finance professionals in the development of modern economies.
(Xinhua News Agency September 20, 2007)
