BEIJING (Commodity Online) : World’s fastest moving economy China’s top currency regulator said the country has overtaken Japan to become the world's second-largest economy after the United States.
According to Yi Gang, chief of China’s State Administration of Foreign Exchange, the Asian giant’s economy expanded 11.1 percent in the first half of 2010, compared with a year earlier, and is likely to log growth of more than 9 percent for the whole year.
"China, in fact, is now already the world's second-largest economy and the issue was whether fast growth can be sustained, he said.
Yi said China's growth rate, which has averaged more than 9.5 percent a year over the past 30 years, was bound to slow over time. If China could chalk up growth this decade of 7-8 percent annually, that would still be a strong performance.
.If China expands by 5-6 percent a year in the 2020s, it will have maintained rapid growth for 50 years, which Yi said would be unprecedented in human history.
He said expectations of a stronger yuan, also known as the renminbi, had diminished. There was no basis for a sharp rise in the exchange rate, partly because the price level in China had risen steadily over the past decade.
Yi's remarks carried an echo of a report by the International Monetary Fund on Thursday, which said the Chinese authorities viewed the yuan right now as closer than ever to equilibrium
China scrapped the yuan's 23-month-old peg to the dollar on June 19 and resumed a managed float. The yuan has since risen only 0.8 percent against the dollar and economists calculate that it has fallen in value against a basket of currencies.
Beijing had no timetable to make the yuan fully convertible, Yi said: "China is very big and its development is unbalanced, which makes this problem much more complicated. It's difficult to reach a consensus on it."
China has been encouraging the use of the yuan beyond its borders, allowing more trade to be settled in renminbi and taking a series of measures to establish Hong Kong as an offshore centre where the currency can circulate freely.
China would stick to the principle of holding its $2.45 trillion of international reserves in a mix of currencies and assets.
The stockpile, the world's largest, was so big that it was impossible to adjust its currency composition in a short space of time, he added.
