Thursday, March 06, 2008

Goodness, I think there is some chance for central bank independence in China yet. Check out the "Fed talk" unleashed by Zhou at the news conference today:

"Everyone noticed that all nine measures mentioned by Premier Wen yesterday targeted inflation. I personally think it is not necessary to view accelerating changes in the exchange rate as (a means of) constraining inflation. But from an analytical perspective, the direction (of exchange rate movement) is correct."

[周小川]:大家注意到,昨天温家宝总理谈到了九项措施,这些都是针对通货膨胀来做的。我个人认为,不必要把汇率变化更多地看作是为了抑制通货膨胀。但从分析的角度,方向也是对的。谢谢。 [10:51]

Eh, what did he mean? Does he agree with Wen or not? The answer is not really. He said it is "not necessary" to view exchange rate movement as a way of constraining inflation, but this means it can be viewed as such. He made that clear by saying that "from an analytical perspective," exchange rate movement is the way to go. So there, all those out there who thought Zhou was a cheerleader of revaluation is right. Before you get too excited, however, remember that Zhou is a central committee member, while Wen is a PSC member. Wen trumps Zhou, unless he has powerful allies at the top. I think he does, but would they go out on a limb on a mundane issue such as exchange rate?

Interesting to note also that Ma Kai is out defending the NDRC policies of the last five years. Reading between the lines one might think that means someone is being rather critical of those same policies.
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