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December 28, 2007

China's yuan closes 2007 at 7.30

The chinese currency advanced twice as fast as in 2006 as policy makers sought to curb inflation and cut a record trade surplus that has strained ties with the U.S. and Europe.

`The government will choose to use appreciation of the yuan to solve the inflation problem,' said Shen Minggao, Citigroup's Beijing-based economist. `The appreciation pace may even quicken next year.'

The yuan rose 0.18 percent to 7.3041 per dollar as of the 5:30 p.m. close in Shanghai, according to the China Foreign Exchange Trade System.


China's central bank signalled it would allow the yuan to appreciate faster in a move that should help contain rising inflation risks from a booming economy that a government economist said was set to grow close to 11 percent in 2008.


Year GDP(yuan) GDP growth Yuan per USD Yuan increase China GDP US GDP
2006 20.94 7.8 2.7 13.2
2007 23.6 11.5% 7.3 3.24 13.8
2008 26.2 11% 6.46 13% 4.1 14.3
2009 28.8 10.0% 5.72 13% 5.0 14.6
2010 31.6 9.5% 5.20 10 6.1 14.9
2011 34.4 9.0% 4.72 10 7.3 15.4
2012 37.5 9.0% 4.37 8.0 8.6 15.9
2013 40.9 9.0% 4.09 7.0 10.0 16.3
2014 44.6 9.0% 3.89 5.0 11.5 16.8
2015 48.2 8.0% 3.71 5.0 13.0 17.3
2016 52.0 8.0% 3.53 5.0 14.7 17.8
2017 55.9 7.5% 3.36 5.0 16.6 18.4
2018 59.8 7.0% 3.30 2.0 18.1 18.9
2019 64.0 7.0% 3.23 2.0 19.8 19.5
2020 68.5 7.0% 3.17 2 21.6 20.1
2021 72.6 6.0% 3.11 2 23.4 20.7
2022 77.0 6.0% 3.05 2 25.3 21.3
2023 80.8 5.0% 2.99 2 27.0 22
2024 84.8 5.0% 2.93 2 29.0 22.6
2025 89.1 5.0% 2.87 2 31.0 23.3


This is an update of my past projection of China's GDP growth and currency appreciation. In May, 2007, I had projected an end of year 7.4 currency exchange rate.

2007 and 2008 GDP projections

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