Yuan devaluation controversy reignited: China says no, Int‘l community skeptical

Sep 11, 2015, 08:30 am

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By Hong Soon-do, Beijing correspondent, AsiaToday - China's yuan devaluation has become the subject of controversy again. While China says there is no more reason for it to continue depreciating yuan, the international community is being skeptical about it. Some experts and economic forecasting agencies even claim that another devaluation is only a matter of time.

Controversy related to another China devaluation continues./ Source from search engine Baidu

According to source of finance in Beijing on Thursday, the controversy was reignited by renowned investor William Ackman, founder and CEO of hedge fund Pershing Square Capital Management. In an interview with Fox Business Network on Wednesday, Ackman claimed that China may be on the verge of another yuan devaluation, stating, "I think their recent small devaluation could be the beginning of a larger one."

The United States' view is not so much different. The country has been claiming the risk of China's artificial currency change through economic institutes and press so far. It means the US considers the yuan devaluation inevitable one. The International Monetary Fund (IMF) seems to be enjoying the debate while encouraging the yuan devaluation quietly.

On the other hand, China made its position clear that there is no reason for the yuan to fall further. Chinese Premier Li Keqiang, who is responsible for China's economic management, said Beijing has no further plans to allow its yuan to decline in value at a meeting of the World Economic Forum in Dalian on Wednesday. He said, "RMB exchange rate is basically stable. We don't want to see a 'currency war' since devaluation would bring more harm than any possible gains to China." In addition, university professors in finance sectors and financial institution officials are staying in line with premier Li, showing their unpleasant attitude towards the international society's perspective.

Given the huge impact it could have on global economy, controversy over yuan devaluation will continue for a while. The controversy will be heating up as Chinese President Xi Jinping makes his visit to the United States on September 22. The arguments on both sides are reasonable enough. However, considering the fact that China is facing tough economic conditions, the additional yuan devaluation argument seems to be more convincing.

#Yuan devaluation #China #William Ackman #Li Keqiang 
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