Greenspan: Beijing Dollar-Buying May Overheat Chinese Economy

Jan. 13, 2005
By Agence France-Presse U.S. Federal Reserve Chairman Alan Greenspan warned March 2 that Beijing's massive buying of dollars threatened to overheat the Chinese economy. China had accumulated $420 billion in foreign-exchange reserves by November of last ...
By Agence France-Presse U.S. Federal Reserve Chairman Alan Greenspan warned March 2 that Beijing's massive buying of dollars threatened to overheat the Chinese economy. China had accumulated $420 billion in foreign-exchange reserves by November of last year as it snapped up U.S. government bonds to keep the yuan-dollar rate steady, Greenspan told the Economic Club of New York. "Chinese central bank purchases of dollars, unless offset, threaten an excess of so-called high-powered money expansion and a consequent overheating of the Chinese economy," he said. Beijing had mopped up some of the excess liquidity created by its purchases by cutting loans to commercial banks, selling bonds and requiring banks to keep higher reserves. But a broad measure of Chinese money supply -- M2 -- had grown 20% in 2003 and a little less so far this year. "Should this pattern continue, the central bank will be confronted with the choice of curtailing its purchases of dollar assets or facing an overheated economy with the associated economic instabilities," Greenspan warned. "Lesser dollar purchases presumably would allow the renminbi [yuan], at least temporarily, to appreciate against the dollar." Copyright Agence France-Presse, 2004

Popular Sponsored Recommendations

Empowering the Modern Workforce: The Power of Connected Worker Technologies

March 1, 2024
Explore real-world strategies to boost worker safety, collaboration, training, and productivity in manufacturing. Emphasizing Industry 4.0, we'll discuss digitalization and automation...

3 Best Practices to Create a Product-Centric Competitive Advantage with PRO.FILE PLM

Jan. 25, 2024
Gain insight on best practices and strategies you need to accelerate engineering change management and reduce time to market. Register now for your opportunity to accelerate your...

Transformative Capabilities for XaaS Models in Manufacturing

Feb. 14, 2024
The manufacturing sector is undergoing a pivotal shift toward "servitization," or enhancing product offerings with services and embracing a subscription model. This transition...

Shifting Your Business from Products to Service-Based Business Models: Generating Predictable Revenues

Oct. 27, 2023
Executive summary on a recent IndustryWeek-hosted webinar sponsored by SAP

Voice your opinion!

To join the conversation, and become an exclusive member of IndustryWeek, create an account today!