Morgan Stanley: China shouldn't appreciate RMB


Updated Thu, 02 Dec 2004 00:00:00 GMT

Morgan Stanley's chief Asia economist Andy Xie warned, if the Reminbi appreciates under international pressure, it will trap China, with low growth, low interest rates and low inflation but a strong currency.

He pointed out that the macro economic situation in today's China resembles that of Japan when its currency was pressed to revalue in its fast growth period.

presently, at least 1.2 billion US dollars of hot money has entered the Chinese mainland and Hong Kong, as speculators gamble on a revaluation of the RMB.  

 The low interest policy that followed created an economic "bubble", with over-investment in stock market and real estate, that Japan is yet to recover from.