Stronger Yuan Would Benefit China Says Donald Kohn

According to a top U.S. Federal Reserve official, a stronger yuan would benefit China, as a stronger currency would result into higher consumer spending and lower exports. The Wall Street Journal reports that Donald Kohn, the outgoing vice chairman of the U.S. Federal Reserve, made this remark during a conference in Zurich.

Without mentioning China directly, Kohn said “countries that have become accustomed to running large current account surpluses” would benefit from “more flexible exchange rates.” “More flexible exchange rates also provide domestic policymakers greater scope to focus on domestic goals of full employment and price stability,” he added.

Kohn believes that if the global economy has to rebalance then China should encourage consumer spending and depend less on exports and the U.S. economy should rely less on consumer spending and save more.