Instability of RMB will bring disaster – Chinese Premier
15 Oct '10
2 min read
Chinese Premier Wen Jiabao requested European Union leaders to reduce their rhetoric in attacking the Chinese RMB rate as the debate and decibels around the RMB rate increases day by day.
EU officials and the business community recently joined the camp of the United States, publicly demanding Beijing to allow appreciation of the Yuan.
Wen Jiabao said in his speech to EU senior officials and business people that, instability of the RMB exchange rate will bring disaster to China and the world.
The RMB exchange rate had been pegged to the dollar until June this year. Although since then, China has allowed fluctuation of Yuan exchange rate within a narrow range, to those countries who have suffered significant drop in exports to China and who have huge trade deficit with China, however, the appreciation of the RMB has been far from their satisfaction.
What dismays Europe is that although the Yuan has appreciated by about 2 percent since June against the dollar, the Yuan has depreciated by 10 percent against the Euro.
Wen Jiabao reiterated the statement made by various senior Chinese officials in the past that, China is committed to allowing gradual appreciation of the Yuan.
Wen said, China will also pay a high price, if it allows the Yuan to float freely. China's export enterprises will turn bankrupt, if the RMB is appreciated by 20-40 as per the demands from the some quarters of the western economies.
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