China is not counting on a quick rebound in the world economy to fuel growth but will concentrate instead on boosting home-grown demand, Yao Jingyuan, chief economist at the National Bureau of Statistics, said on Saturday. The need for China and other countries with big current account surpluses to rebalance their economies away from exports will be a main theme for finance ministers and central bank chiefs at the Group of 20 meeting in Scotland on Saturday.
"The world's economy is recovering, but it will need more time. So China should basically rely on increasing domestic demand and expanding its home market to drive its economic growth," the official Xinhua news agency quoted Yao as telling an oilseeds conference in Guangzhou.
Although he described external demand as weak, Yao said some manufacturers in the export-orientated industrial heartlands of the Pearl River Delta near Hong Kong were facing labour shortages. With China firmly on the recovery path, international pressure has been mounting once more on Beijing to push up the exchange rate of the yuan. China has virtually repegged its currency to the dollar since mid-2008 after letting it rise 21 percent over the preceding three years.
But Lian Ping, chief economist at Bank of Communications, said keeping the tight link to the dollar was more probable than a resumption of the yuan's gradual rise seen from 2005 to 2008. "In my view, China is likely to maintain the dollar peg. There's a greater chance of that," he told a news conference in Beijing. Another option would a one-off revaluation of the order of 20 percent, but Lian said that was all but impossible for China because the impact on exporters would be "catastrophic."
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