China Opposes Others’ Loose Policy, Li Keqiang Co-Author Says
“We have already taken a position on this before and China doesn’t approve of some countries’ overly accommodative monetary policy,” Li Yining, 82, a Peking University professor and delegate to China’s top advisory body, said at a briefing in Beijing today when asked about Japan’s recent easing. “This is an act of transferring the crisis to others.”
The remarks may reflect official displeasure over the yen’s depreciation amid Japanese Prime Minister Shinzo Abe’s campaign for more monetary easing to fight deflation. China is “fully prepared” for a currency war should one happen, central bank Deputy Governor Yi Gang said March 1, according to the official Xinhua News Agency.
China can take steps to counter the effects of other nations’ monetary policies such as expediting industrial upgrading and boosting indigenous innovation, Li said, without mentioning Japan in his response. “Given the size of our foreign exchange reserves, we will continue to go out and invest overseas and import more from abroad,” Li said.
The yuan has strengthened about 14 percent against the yen over the past three months, according to data compiled by Bloomberg. A weaker currency can make a nation’s exports more competitive.
Li Keqiang, who holds a doctorate in economics from Peking University, studied under Li Yining, according to Robert Lawrence Kuhn, author of “How China’s Leaders Think.”
Li Yining, Li Keqiang and Li Yuanchao, a member of the Communist Party’s Politburo, co-authored a 1991 book titled “Strategic Options for Prosperity,” according to Li Yining’s biography on the website of Peking University’s Guanghua School of Management. The three men are not related. A fourth co-author was Meng Xiaosu.
Li Keqiang is set to succeed Premier Wen Jiabao during this month’s meeting of the National People’s Congress in Beijing which will complete a once-a-decade power handover.
Li Yining also said at today’s briefing that financial risks are the biggest threat to the economy and upward inflationary pressure exists.
Separately, Zhou Xuedong, governor of the Nanjing branch of the People’s Bank of China, told reporters in Beijing today that the weaker yen may impact China’s exports and adds “imported pressure” on inflation.
Yi said that in terms of monetary policies and other mechanisms, China “will take into full account the quantitative easing policies implemented by central banks of foreign countries,” Xinhua reported March 2.
Speaking in Beijing yesterday, Yi reiterated that he hopes monetary authorities worldwide will adhere to the Group of 20 consensus and avoid currency wars, which “will have no winners.” Finance ministers and central bankers from G-20 nations meeting in Moscow last month sharpened their stance against governments trying to influence exchange rates as they sought to tame speculation of tit-for-tat competitive devaluations.
--Zheng Lifei. With assistance from William Bi and Feifei Shen in Beijing. Editors: Scott Lanman, Nerys Avery
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