The World Bank recommended higher interest rates and a stronger currency for China on Wednesday, March 17. In its quarterly assessment of China, which is poised to overtake Japan this year as the world's second-largest economy after the United States, the World Bank raised its forecast to 9.5 percent growth for 2010 from the 8.7 percent it projected in November. It also estimated that growth would slow somewhat next year, to 8.7 percent.
Separately, the managing director of the International Monetary Fund, Dominique Strauss-Kahn, also said the renminbi's exchange rate was too low. "Some currencies in Asia are undervalued, especially the renminbi," Mr. Strauss-Kahn told a committee of the European Parliament in Brussels.
Many American politicians argue that the current level, at 6.8 renminbi to the dollar, gives Chinese exporters an unfair advantage by making their goods cheap for overseas buyers. (Source: Bettina Wassener, New York Times, Mar 17, 2010).