China Shouldn't Float Yuan Until Well Beyond 2010: UFJ
China shouldn't shift to a floating exchange rate system until well beyond 2010 as the nation's economic and financial system is ill-prepared to cope with the resulting wild swings in currency rates, a Japanese private think tank warned Thursday.
China should instead take a more gradual approach, such as expanding its trading band for the yuan by 5% to 10%, UFJ Institute said in a report.
The institute warned that China's economy would be vulnerable to wild fluctutations in the yuan if it were to shift to a floating regime any time soon. This is because the nation's per capita gross domestic product has barely reached $1,000 in 2003, half to one-third the size of Japan and western industrialized nations when they adopted floating exchange rates in the early 1970s, the report said.
China's stock and bond markets also have not grown large enough to accept massive global funds that would pour into the country if it were to liberalize its capital market, UFJ said.
"China may have to wait until well beyond 2010 to adopt a floating yuan without bearing the risk of wild swings in currency rates," the think tank said.
China, which currently pegs the yuan to the dollar, has come under pressure from countries like Japan and the U.S. to float its currency, since they believe China undervalues its currency to boost exports and curb imports.
日本研究机构：中国2010年前不应实行浮动汇率
一家日本私人研究机构周四警告说，至少在2010年之前，中国不应该实行浮动汇率体制，原因是中国的经济和金融体系尚未为应对人民币汇率大幅波动做好准备。
UFJ Institute在一份报告中称，中国应采取较为渐进的方式，例如将人民币汇率波动区间扩大5%-10%。
这家机构警告说，若中国很快实行浮动汇率体制，中国经济将容易受到人民币汇率大幅波动的打击。
这份报告称，这是因为2003年中国人均国内生产总值(GDP)仅达到1,000美元，相当于日本和西方工业国人均GDP水平的一半，甚至1/3。而这些国家早在1970年代初已采用浮动汇率制。
UFJ称，若中国放宽对资本市场的限制，大量国外资金将流入中国市场，但中国的股市和债市规模不够大，不足以接受这些资金。
这家研究机构称，中国可能须等到2010年之后再采用浮动汇率制，这样无需承担人民币汇率大幅波动的风险。
