A pair of prominent Chinese researchers employed by the country’s government published a call for the country to begin using the yuan to keep inflationary pressure at bay, according to Bloomberg. Ba Shusong of the State Council’s Development Research Center urged for policymakers to allow the national currency to appreciate more rapidly, a call echoed by Wang Yong, a professor at the People’s Bank of China trainer center.
Ba wrote, “A moderate acceleration in the yuan’s appreciation would help China effectively deal with imported inflation,” while Wang said, “Allowing faster appreciation of the yuan will be an important policy consideration in the next phase” of fiscal action. Wang argued for policymakers to allow for a wider daily trading band by an “appropriate margin” during the second half of the year, rather than a one-off revaluation of the currency. The researchers’ suggestions come on the heels of rapid increases in the reserve ratio requirement for banks as well as interest rates.
