October 29 saw the People's Bank of China (PBOC), the nation's central bank, published the 2001 third-quarter report on the implementation of monetary policy, in which the possible impact on Chinese economy by "9.11 Incident" was for the first time revealed in detail.
While a few days ago on the fourth-quarter regular meeting of PBOC monetary policy committee, attended by PBOC President Dai Xianglong, Chairman of the China Securities Regulatory Commission Zhou Xiaochuan and renowned economist Wu Jinglian, experts pointed out that full attention must be paid on the negative impact exerted by the terrorist attacks in the United States on China's economy.
The impact is mainly displayed in the following five aspects, according to the central bank report.
First, on trade growth. The incident’s impact on export may last long, that is to say, export will be more difficult from the first half of next year. Since the incident accelerated and deepened the economic slowdown of the United States, it may further extend the force and time of impact on China’s export.
Second, on growth of foreign exchange reserve. Due to increased difficulty in export, trade surplus may decrease faster so as to affect growth of foreign exchange reserve. Meanwhile expense on imported crude oil will increase because of continual surging up of international oil price, and this may also contribute to deduction of trade surplus.
Third, on foreign capital flow-in. Because of global economic depression and the shaken notion to take the United States as the investment 'haven', international surplus capital may get adjusted in investment strategy which may benefit China. In other words, direct investment flow to China may increase in a degree, encouraged by China’s impending WTO membership. The impact may last to next year.
Fourth, on the level of exchange rate. Since the exchange rate of US dollars is still low and the rate of RMB to other currencies would decrease accordingly to maintain comparative stability, with the extent expected between 5 to 10 percent, larger than estimations before "9.11 Incident".
Fifth, on interest rate. After the Incident major industrial countries all expressed intention to further loose monetary policy to boost economy. It is estimated within this year the global currency situation would be further loosed, which may exert a pressure on the general interest level of China.
(People's Daily October 30, 2001)
