MercoPress. South Atlantic News Agency

Greenspan insists with floatation of Chinese currency

Federal Reserve chairman Alan Greenspan said China is harming its future by not allowing its currency, currently fixed to the US dollar, to float.

However Mr. Greenspan who was addressing the US Congressional Budget Committee said he believes China will eventually abandon the fixed exchange rate and let the renminbi float.

"Having the renminbi pegged to the US dollar is beginning to have a significant detriment for the Chinese economy", argued Mr. Greenspan.

Washington has insistently tried to convince China to have a more flexible exchange policy which has kept the renminbi artificially cheap at 8,28 to the US dollar, helping to flood United States with exports but also feeding a strong resentment among US businessmen.

"Holding the exchange rate in its current situation, is avoiding future growth in trade terms for China in the coming decades", said Mr. Greenspan adding that "as you can imagine the US government has been in talks with Chinese officials to try and convince them that on our experience they should be moving sooner than later".

Mr. Greenspan said that there's an ongoing debate in the Chinese government of the issue, "but I don't have the elements to project when they will act, but I'm reasonably certain they will eventually act".