World Bank President Robert Zoellick said Monday that it was timely for China to revalue its currency.
This comes amid US criticism that Beijing is deliberately keeping the yuan down to gain a trade advantage.
Robert Zoellick said that as export-driven China remakes its society to depend more on consumer spending, it could become an opportunity to revalue the currency.
Zoellick said that aside from increasing the purchasing power of ordinary Chinese people, an appreciating currency would also send a signal to local firms to focus future investment and capacity more toward domestic demand rather than producing for export.
Zoellick said China increasingly recognizes that its industrial structure is out of whack, with high profits accruing to state-owned enterprises accounting for much of the country’s extraordinarily high savings rate.
Part of the reason for those profits, he said, is that state-owned Chinese banks lend to other state-owned companies at very low rates and pay Chinese depositors very low rates of interest.
World Bank chief economist Justin Lin, a Chinese national, also has attributed the profits to wages the companies pay, which he said are ‘depressed compared to the potential.’
