Foreign easing policies to have limited effect on China, say experts
Updated: 2013-04-09 10:38
By Wang Xiaotian in Boao, Hainan (China Daily)
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The impact of major economies' quantitative easing on China will be "marginal" and the nation should continue to deepen its ongoing financial reform, especially currency reform, to better cope with global economic uncertainty, said experts.
Fred Hu, chairman of Primavera Capital Group and a former economist at the International Monetary Fund, said based on the influence of US monetary easing in recent years, measures introduced by Japan and the United Kingdom would also have a very limited impact on China.
"We didn't witness a surge in capital inflows and devastating effects as some liquidity still goes back to the US. History has showed us that China's real problem and threat comes from its own economic mode instead of outside policy changes," he said.
By further improving convertibility of the capital account and increasing the flexibility of the renminbi exchange rate, China would free itself from the necessity of injecting money into the market passively when foreign exchange rates rise, according to Hu.
"I don't think there is any solid reason for China's ongoing reforms to falter due to concerns over monetary easing in developed economies."
He made the remarks while attending the annual conference of the Boao Forum for Asia.
Li Ruogu, chairman and president of the Export-Import Bank of China, said: "Monetary easing by Japan and other countries has already affected China as commodity prices fluctuate dramatically. For China, the most important thing is still to deepen its economic reform."
The Bank of Japan's plan to double its monetary base over the next two years is not as aggressive as other central banks, said Paul Sheard, executive managing director and chief global economist at Standard & Poor's.
He said that since the end of 2008, the balance sheet of the British central bank has expanded by 333 percent, with that of the United States rising by 252 percent, while the Bank of Japan's balance sheet only rose by 51 percent.
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