Factbox: Business leaders comment on yuan appreciation

SINGAPORE (BestGrowthStock) – China is under mounting international pressure to let the yuan resume its appreciation against the dollar after a hiatus of close to two years.

Western leaders complain the currency is undervalued, giving China an unfair edge in export markets and skewing global trade.

Here’s what business leaders are saying about the yuan.

JAMES ROGERS, CHIEF EXECUTIVE OF EASTMAN CHEMICAL CO:

“Frankly, Eastman is doing just fine doing business in China right now. But of course people do talk about the currency, whether or not the currency should float, is the currency undervalued. I’m trying to take a long-term view, not just the next month. And I think by looking at five, 10, 15 years, what shall we expect? Do we think China’s currency will always be pegged to the dollar or is it likely other currencies will be pegged to China. I would argue it would be the latter, it would be currencies pegged to China not the other way around. So I personally think that would be the natural progression.”

ZHANG YAQIN, CORPORATE VP, MICROSOFT:

“The world is so intertwined that companies like Microsoft are making a lot of investments, especially in R&D, in China. We manufacture things like the Xbox from China and export to the rest of the world, so when there is a yuan appreciation, obviously that will add to costs. That will make the price of the product higher and the U.S. customer will have to pay more. So I don’t understand how that will balance the deficit.”

RICHARD YORKE, CEO, HSBC BANK (CHINA) CO LTD:

“I don’t think (a return to yuan appreciation) would have a major impact in terms of our business. The key thing is that … there is an increase in dialogue between the various parties involving in this matter. That is important. If anything is good for China it is going to be good for our business.”

PAN SHIYI, CHAIRMAN, SOHO CHINA:

“This of course is good news for us (if the yuan appreciates) because all of our assets are based on yuan. The company also has a HK$2.8 billion convertible bond. An appropriate appreciation of yuan will be positive to both the economy of China and the United States. Appropriate means a gradual rise.”

FRED HU, FORMER CHINA PARTNER, GOLDMAN SACHS:

“We are not talking about earthshaking changes but only returning to the pre-crisis, elastic system of a managed float, linking with a basket of currencies.”

“Under a fixed exchange rate, the central bank basically has no room to raise interest rates. In this situation, if the U.S. does not raise interest rates but China does, expectations of yuan appreciation will increase. China’s Central Bank could only adjust interest rates based on domestic needs if the foreign exchange rate is elastic.”

TINA LO, MANAGING DIRECTOR, INDUSTRIAL BANK OF TAIWAN:

“I think the yuan is like to rise gradually, and there should be some action this year. Since the yuan is heading for a rising trend, the sooner the better for us to find good projects and make investments. But we would not invest blindly.”

“Foreign exchange risk is just one of the factors to be considered before making an investment and that would not deter us from investing in China.”

XU XIAONIAN, PROFESSOR, CHINA EUROPE INT’L BUSINESS SCHOOL:

“I think in the economic circles there is a consensus that China should have a more flexible foreign exchange rate policy, there is no disagreement on that. We don’t care about what others say but for our best interest we should have a more flexible foreign exchange rate policy. Let the currency goes where the market forces are driving it to.”

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Factbox: Business leaders comment on yuan appreciation