China May Consider One-Time Yuan Gain, Goldman’s O’Neill Says

The article addresses the issue of possible overheating of the Chinese economy. Jim O'Neill, Chief Economist at Goldman Sachs Group Inc, expects China to appreciate its currency by 5% and increase interest rates to cool down the economy. Chinese Economy quickly recovered from the recession and showed a stronger than estimated rebound in the fourth quarter, and the inflation rate shoot up to 1.9% in December. Although the appreciation of the currency to cool down the economy could be done incrementally on the daily basis, Jim O'Neil says Chinese government may allow to implement a bigger one-off move by 5% or more. In addition to change in exchange rates, there is a certain expectation that China will hike interest rates as well.