Moderately easy monetary policy still works

By Huang Daohen

Is the current monetary policy too lenient? Should the government reform the financial sector to answer global financial restructuring? The answer is what observers and experts across the world are dubbing the country’s role in financial market.

On Tuesday, economists, entrepreneurs and officials attended the 2009 Golden Qilin Forum, organized by the Sina.com, at the Beijing Kerry Center to weigh in on the country’s pro-growth policy.

Apparently works, and it is here to stay.

Edmund Phelps: Yuan reform benefits all

Reforms of the exchange system are meeting long-term targets, Edmund Phelps, an American economist and the winner of the 2006 Nobel Prize in Economic Sciences, said.

The exchange rate has often been a flashpoint for US criticism of China. But Phelps says a stronger yuan will only hurt the US.

If China loses its share of the US market due to yuan appreciation, its economic growth will slow. But it will not help to reduce the trade deficit, he said.

In fact, as US manufacturers are moving their factories into China to cut costs, US customers still be importing products from China ?just from a different brand.

The US has a more important stake in yuan reform, he said. “For China and he US, it’s better to cooperate and negotiate than not talk.”

The government abandoned its policy of pegging the yuan to the US dollar in 2005. The currency’s exchange rate against the dollar has risen cose to 10 percent since then.