China, “Investigating Yuan Devaluation”

Lee Zao-Hang, Vice Director of the central bank in China, expressed the sentiment that the devaluation of the yuan is inevitable amid continuous devaluation of the Japanese yen.

Vice Director Lee pointed out yuan`s falling to 135 yuan per dollar, which is the minimum in 30 months in an article published in a state economic newspaper and stressed, "In case the yen devaluation continues, Chinese currency authorities should change the existing currency system which operates as a fixed currency exchange system and investigate the appropriate devaluation of yuan."

This is the first time that a high financial officer of China publicly announced the possibility of the devaluation of the yuan, expressing concerns about the continuous devaluation of the yen.

Chinese Premier Zhu Rhongji and Daishang Rung, Director of the central bank, have been saying, "China will not devalue yuan artificially."

Mr. Lee also stressed, "There is Japan`s strong and efficient policy regarding the devaluation of the yen, which seeks to get rid of external expenditure supporting China`s steady development so that China`s internal strength to develop its economy can be weakened."

He analyzed that Japan`s devaluation of the yen has three purpose such as: r Overcoming economic difficulty through expansion in exports during America`s economic downtrend due to the 9.11 attack; r Response to the Euro, Europe`s unit currency which was fully inducted this year; r To block China`s steady and high 7 percent economic growth rate.

ljhzip@donga.com