BEIJING (MNI) – A senior Chinese government economist warned
Saturday that Europe seems to be following the U.S. in printing its way
out of the current debt crisis, and that China could wind up as the
biggest victim.
Chinese Academy of Social Sciences professor Yu Yongding said he is
concerned that Europe has “no resolution, no will or capacity” to
implement austerity, and European countries will instead depreciate the
euro to reduce their liabilities.
The European Central Bank’s long-term refinancing operations (LTRO)
suggest that it is taking a page from the Federal Reserve’s playbook and
has abandoned its opposition to monetary easing, he said. China should
prepare for the consequences of this.
“My basic conclusion is: European countries, the United States and
some other countries … want to mitigate their liabilities via printing
money, via inflation. What is worrisome is that Europe is possibly on
this track, and may be taking this path,” Yu told the China Development
Forum, according to a transcript published by Sina.com.
Yu, a former member of the Monetary Policy Committee of the
People’s Bank of China, has long criticized the Fed’s easy money
policy.
But he has been a long-standing and outspoken critic of his own
government, too, accusing it of moving too slowly on exchange rate
reform and allowing dangerously large reserves to build up.
“I suspect that the world is entering into a new stage, the era of
money printing by central banks.”
“China is the largest creditor. We have to worry about it. For
debtors, the way of depreciating their currencies makes the biggest
victims the creditors,” Yu said, again urging China to speed up its
economic adjustment.
beijing@marketnews.com
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