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WORLD NEWSWednesday 12 August 2015

China’s move to devalue currency could reverberate globally

A man walks past a currency exchange shop in Hong Kong, Tuesday, Aug. 11, 2015. China (China) is willing to use all will be based on where the
available tools, including a yuan closed the previous
devalued its tightly controlled currency Tuesday following a slump in trade, allowing the yuan’s weaker currency, to prop day, a change that gives
up exports and its domes- market forces a bigger
biggest one-day decline in a decade. (AP Photo/Vincent Yu) tic economy,” said Eswar role in determining the cur-
Prasad, an international rency’s level. The center
JOE McDONALD become comparatively A close peg between the economist at Cornell Uni- of Tuesday’s trading band
C. S. RUGABER costlier. dollar and the yuan has versity. was set 1.9 percent below
AP Business Writers China’s central bank said hurt Chinese exporters by Yet many economists Monday’s level. The yuan
BEIJING (AP) — China’s the yuan’s devaluation keeping their goods ex- cautioned against see- quickly fell 1.3 percent
surprise move Tuesday to was a result of reforms pensive overseas, thereby ing Beijing’s move mainly against the dollar and was
devalue its currency has intended to make its ex- threatening jobs in key as an effort to benefit its down 1.9 percent by after-
intensified concerns about change rate more market- manufacturing industries. exporters at the expense noon.
a slowdown in the world’s based. The yuan is linked Exports in July plummeted of overseas competitors. China’s economic growth
second-largest economy, to the dollar, which has by an unexpectedly steep They note that China’s has slowed to an annual
whose growth rate has jumped in the past year. 8.3 percent from a year currency, left to market rate of just 7 percent —
reached a six-year low. It is Tuesday’s move will mean earlier. A cheaper yuan forces alone, would have healthy for most countries
also fanning tensions with the yuan will more fully re- will lower the prices of Chi- declined in value in recent but far below the double-
the United States and Eu- flect market fluctuations, na’s exports. months. digit pace it has enjoyed
rope, whose exports could Chinese officials say. “The move signals that “It is a small step forward for decades. The country’s
to accommodating mar- leaders fear that growth
ket forces,” said Sung below that pace will raise
Won Sohn, an economics the unemployment rate
professor at the Califor- and possibly lead to social
nia State University’s Smith unrest.
School of Business. Still, China’s action Tues-
China’s currency move day sparked complaints in
unnerved global investors. Washington, where mem-
U.S. stocks tumbled Tues- bers of Congress have long
day, with the Dow Jones complained that Beijing
industrial average closing manipulates its currency to
down 212 points. gain a trade advantage.
The yuan, also known as “For years, China has
the renminbi, is allowed rigged the rules and played
to fluctuate in a band 2 games with its currency,”
percent above or below said Sen. Chuck Schumer,
a rate set by the People’s a New York Democrat.
Bank of China based on “Rather than changing
the previous day’s trading. their ways, the Chinese
The bank said that starting government seems to be
Tuesday, the daily target doubling down.”q

Japan, China vie to build high-speed rail for Indonesia

NINIEK KARMINI Tuesday that a decision on Joko Widodo has ambitious biggest economy. Both other perks as they vie to
Associated Press which proposal to accept plans to improve Indone- countries have substan- secure the rail contract.
JAKARTA, Indonesia (AP) could be made in about sia’s infrastructure, which tial expertise in high-speed China’s embassy in Jakar-
— Indonesia’s top devel- two weeks. The high-speed could boost manufactur- trains though China is a ta on Monday released a
opment official said the rail, which will connect the ing and create hundreds of late-comer to the industry statement promising 40,000
government is studying capital Jakarta to Band- thousands of new jobs. Offi- compared with Japan. new jobs in Indonesia for
proposals from China and ung, is part of Indonesia’s cials have said that the final “We will conduct a review every year of the line’s
Japan for construction of 750-kilometer (466-mile) proposals made by region- not more than two weeks construction. Chaniago
a high-speed rail line and high-speed train project al rivals China and Japan and will make a decision said China estimates the
expects to announce the that would cut across four followed intense high-level soon,” Chaniago said after line would cost $5.5 bil-
outcome later this month. provinces on the main is- lobbying efforts as the two meeting with his Chinese lion and is offering Indone-
Andrinof Chaniago, the na- land of Java and end in the countries compete for po- counterpart, Xu Shaoshi. sia 50-year loans that will
tional development plan- country’s second largest litical and commercial in- China and Japan have of- charge annual interest of
ning minister, told reporters city of Surabaya. President fluence in Southeast Asia’s fered low interest loans and two percent.q