Chinese banker predicts weakened US dollar in long term

Special Report: Summer

Davos

TIANJIN, Sept. 28 (Chinese media) -- The U.S. dollar would face short-term fluctuations and

weaken in the long run, a leading Chinese banker predicted here on Sunday.

Speaking at the Summer Davos forum in this north

China port city, Bank of China Vice President Zhu Min said he believed it would

be less likely for the United States to sell more treasury bonds to other

countries to obtain the funds needed to bail out the turmoil-beleagued financial

market, which would only accelerate inflation in other countries.

Instead, the U.S. could only issue other bonds to

finance the rescue plan, which Zhu said would definitely cause the dollar

depreciation in the long term. The bailout fund will have topped one trillion

U.S. dollars if the U.S. Congress passes the Fed's 700 billion dollar financial

rescue plan.

Zhu said market confidence could not be recovered

simply with the help of the 700 billion dollars, citing the U.S. dollar is a

currency with turbulent fluctuations.

"It takes a long time to solve the current liquidity

strains and investment crisis," Zhu said.

Zhu also saw short-term fluctuations for the dollar

since investment demand for the dollar is dropping and there could be "more bad

news" in the coming few weeks.

Well-known Chinese economist Cheng Siwei told the

forum that the pace of appreciation for the Chinese currency, the yuan, should

be slower.

The United States and some European countries have

been arguing that the yuan's value is too low, which gives Chinese exporters an

"unfair advantage." The yuan has witnessed continuous appreciation in recent

years, but this time more and more Chinese enterprises, including textile firms,

are complaining about money losses and possible shutdown.