 |
A noted global economist said it was wrong for the U.S. to press China to revalue its currency to solve their own economic problems.
Stephen Roach, Morgan Stanley Asia chairman, said Tuesday that U.S. policymakers and academics, including Paul Krugman, are “irresponsible” to claim that the U.S. economy is hurt by China’s managed foreign exchange rate.
“There is no currency fix that China needs to really respond to from the U.S. side,” Roach said in a press conference in Seoul.
“Currency fixes work in extremely complex unpredictable ways, and there is absolutely no guarantee that a sheer appreciation of the renminbi will be doing anything close to what academics and policy officials think will be the case,” he said. “Those arguments are not nearly as certain as they believe.”
Roach is the non-executive chairman of Morgan Stanley, an investment bank, in Asia. He is also a renowned economist, teaching at Yale University.
American politicians and economists have raised criticism on China’s managed foreign exchange regime, saying the country is setting the value of the yuan (renminbi) too low in order to support exports.
The debate has been escalating over the past two weeks since the Brazilian finance minister used the term “currency war” to attack currency interventions in China, Japan and other export-oriented countries, while defending his own capital control measures.
Roach’s view is similar to that of Korean officials. Kim Choong-soo, the governor of the Bank of Korea, suspected that there could be a “hidden motivation” behind the rhetoric of the currency war. Sakong Il, chairman of the G20 Preparation Committee, and Shin Hyun-song, presidential advisor on international economy, also think that U.S. politicians are using the issue to win votes ahead of the Nov. 2 congressional election.
On Tuesday, Roach looked almost angry at those people who blame China. He especially handpicked Paul Krugman, economist at Princeton University and writer for The New York Times. He said that though “a bearded man” insists the low value of the yuan is costing the United States 1.4 million jobs, his colleague at Yale, Ray Fare, estimated that a yuan revaluation will add only 40,000 jobs in the United States.
“The benefit from a high Chinese currency will be almost completely offset by negative output from higher import prices,” he said. “Calculations from people like Krugman and Fred Bergstein are a partial analysis. Theirs are irresponsible calculations.”
Roach said the main problem of the global imbalance of growth is an imbalance in savings between China and the United States _ the former is accumulating a surplus while the latter is overspending. He suggested that Korea can calm down the U.S. currency warmongers at the upcoming G20 Seoul Summit next month.
“Korea is the host. The best thing the host can do when there is a debate, is to make sure it is focused on the issue, and suggesting to the participants that maybe there is another issue that can get to the same point.
“There is another point of view. You need to look at something other than currency to solve the global problem. Korea needs to provide alternatives. That would be a positive contribution as host country,” he said.
The conference was held on the sidelines of World Knowledge Forum. Krugman will make his own speech and attend a press conference at the same venue Wednesday.
![[INTERVIEW] South Korea needs to make decision on sending lethal aid to Ukraine : CNAS CEO](https://img.koreatimes.co.kr/upload/thumbnailV2/a2180e54d7664819812514cc3d605dd5.jpg/dims/resize/178/optimize)
![[INTERVIEW] Foreign-born entertainers seek to revolutionize local industry](https://img.koreatimes.co.kr/upload/thumbnailV2/4a6b2bd3d23044d699dee3c5bb956863.jpg/dims/resize/178/optimize)
