外文翻译人民币在中国其价值其可调节汇率和其未来发展.docx

外文翻译人民币在中国其价值其可调节汇率和其未来发展.docx

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外文翻译人民币在中国其价值其可调节汇率和其未来发展

中文4430字

外文原文

TheChineseRMB:

ItsValue,ItsPeg,andItsFuture

--TRADEIMBALANCESHAVEMORETODOWITHTHEU.S.THANWITHCHINA

ThevaluationoftheChineserenminbi（RMB）hasdrawnlotsofattentionlatelyandagreatdealofpressureonthepartofdevelopednationsforrevaluation.Inaddressingtheissueofvaluation,thispaperdevelopsanewpurchasingpowerparity（PPP）indexofChina’sexchangerateandfindsthatthewhileundervalued,theundervaluationisneitherunusualnorbadpolicy.Moreover,China’soverallexternaltradebalancedoesnotseemtobethatfaroutofequilibrium.China’sdesiretojointheG-7clubislikelytoresultinabandoningitspeg,however,despitetheincreasedrisktoitseconomicdevelopment.

ThevaluationoftheChineserenminbi（RMB）hasdrawnlotsofattentionlately.TheIMF,theU.S.government,andtheG-7financeministersareurgingChinatorevalueitscurrency,whichiscurrentlypeggedat8.28tothedollar.TheargumentsforChinatoappreciateitscurrencyroughlyfollowtheselines:

•China’scurrencyisgrosslyundervalued;

•theundervaluedRMBisattractingafloodofhotmoneyintoChina,complicatingtheauthorities’effortstoengineerasoft-landingforanoverheatedeconomy;and

•theRMB’sundervaluationanditspegtothedollararepreventingotherAsiancountriesfromallowingcurrenciestoriseagainstthedollar,sinceappreciationwoulddamagecompetivenessrelativetoChina.

Thislastpointisofparticularconcernbecause,itisargued,U.S.externalimbalancescannotbeaddressedinthefaceofChina’sandotherAsiannations’historicallyunprecedentedaccumulationsofU.S.dollarreservesinrecentyears.TherehavebeenmanystudiesontheRMB’svaluationwithinconclusive,contradictoryresults（see,e.g.,Wang,2004）.Toaddressthatdifficultvaluationquestion,thispaperdevelopsanewabsolutePPPindexthatmeasuresChina’sPPPagainsttheUnitedStatesandothercountries.ThenewindexshowstheRMBtobesubstantiallyundervaluedinthecontextof“conventionalwisdom.”However,theundervaluationisnotunusual,givenChina’slevelofeconomicdevelopment;andconventionalwisdomdoesnotapplytoChina,becausebyanymeasureitisanundevelopednationforwhichacurrencypegisusefultomaintaindomesticeconomicandpoliticalstability（Prasadetal.,2003）.Intermsofmultilateralexternalbalances,wefindithardtoarguethatChina’scurrencyiscontributingmuchtoitstradeandbalanceofpaymentsurpluses,especiallyifonetakesthe1997perspectivewhentheRMBwasundertremendousdepreciationpressure.Indeed,thereisclearevidencethatifChina’stradebalancewasevenlydistributedamongitstradingpartners,therewouldbehardlyanypressureforChinatoappreciateitscurrency.Thus,thepressureispoliticalandstructuralinnature,originatingfromthelargeandgrowingmultilateraltradeimbalanceoftheUnitedStates.Unfortunately,itismucheasiertoblameChinathantoattacktheunderlyingstructuralcausesoftheU.S.tradedeficit.WeconcludethatthepoliticalpressureonChinatoabandontheRMB’spegtothedollarislikelytopersist,and—asthemostimportantgrowthmarketintheworldtoday—Chinaismorelikelytomovesoonerratherthanlatertodemonstratethat,inspiteoftheriskstoitsfragilefinancialsystem,itwillshareitsglobalresponsibilitiesasiteventuallyjoinstheG-7.Thepaperwrapsupbyplacingtheexchangeissueinthebroadercontextanddiscussingthelonger-termprospectsoftheRMB.

IstheRMBUndervalued?

TheRMBisundervaluedintheconventionalsensethatthereistoomuchdemandforitrelativetothesupply.Fundamentally,demandforforeigncurrencycomesfromthreesources:

•tobuygoodsorservices,

•toinvestinphysicalorfinancialassets,and

•tospeculateonmovesoftheexchangerateitself.

Withaclosedcapitalaccount,China’scurrencyislargely,butnotentirely,immunefromcurrencyspeculatorsandshort-termportfolioinvestors.RecentstudiesattheChinaNationalEconomicResearchInstitute（2003）indicatethatmuchoftheso-called“hotmoney”inflowsarenotaresultofforeignhedgefundactivities.Rather,theyareachangeinborrowinganddepositbehaviorsofdomesticfirmsandindividuals,takingadvantageoftheloopholesinthecurrentforeignexchangeregulations.Thus,wecanfocusourattentiononthetradeandlongterminvestmentflowsinChinaandlookatthestandardmeasures,suchaspurchasingpowerparity（PPP）,tradebalance,currentaccountbalance,balanceofpayments,andforeignreserves.

PPPisanancienteconomicconcept,datingbackatleasttoDavidHume（1752）,whichhasbeenexperiencingsomethingofarevivallately.TheEconomist（current）definesPPPas“theexchangeratethatequatesthepriceofabasketofidenticaltradedgoodsandservicesintwocountries.”ThetheoryisthatPPPexchangeratesrepresenttheequilibriumlevelsamongthenationsandthatanydeparturefromtheselevelscausespotentiallysignificantanddistortingtradeimbalances.TherearedifferentmeasuresofPPP:

astrongversionor“absolute”versionthatemphasizestheabsoluteequalityofprices（sometimescalled“theLawofOnePrice”）anda“relative”versionthatemphasizestheongoingmovementovertimetowardsthatequality.

ShouldChinaBowtothePressure?

Asidefrompoliticalconsiderations,whichwewilldiscusslater,thequestionofwhetherChinashouldmovenowisacomplexone,relatingtoseveralconsiderations.First,marketexpectationsoftheRMB’smovehavealreadycausedasignificantreversalofcapitalflightandincreasedupwardspeculativepressure.Second,cyclicalglobalmacroeconomicdevelopmentsarelikelytoreduceupwardpressureontheRMB.Third,Chinaisinthemidstofcriticalstructuralreforms,especiallyinthefinancialsector,thatrequirefocusedattention.Fourth,itisincreasinglyclearthatthecurrenteconomicoverheatingissectoralinnature,whichisinsharpcontrastwiththe1993-4episode.TheseconsiderationssuggestthatitisnotinChina’sinteresttorevaluethecurrencyatthistime.Let’stakeacloserlookateachoftheseissues.

Re-peggingtheRMB

Re-peggingtheRMBatavalue,say,15-20percenthigheragainsttheU.S.dollarwouldinstantlyvindicatethecurrencyspeculators,althoughtheyaremostlydomesticplayers.Overthelastcoupleofyears,theneterrorsandomissionscategoryinChina’sbalanceofpaymenthasshownalargeswingfrompersistentdeficitstoasurplusof$7.5billionin2003.Theneterrorsandemissionscategoryisbelievedtocaptureillegalcapitalmovements.Duringmuchofmid-tolate-90s,China’scapitalflight,asapercentageofGDP,wasthesecondworstintheworld（onlyRussiawasworse）.Infact,itwasworsethanMexicoin1994andSouthKoreain1997duringtheheightoftheircurrencycrises.Recently,however,someofthiscapitalisfindingitswayback,asexpectationsofRMBappreciationhaveraised.Thereisalsostrongindicationthatbusinessesandindividualsareinvolvedincurrencyspeculation,whichhascontributedtotheoverheatingofrealestateinvestment.Revaluingnowwillencouragefuturespeculation,whichcouldexacerbatethebalanceofpaymentspressure.

MoreChineseInterestRateFlexibility

AstheFedcontinuestoboostU.S.interestrates,Chineseauthoritieshavemoreflexibilitytoraisedomesticinterestrateswithoutworryingaboutwideningtheinterestrategapandencouragingfurtherhotmoneyinflows.Withglobaleconomicgrowthonlymoderatingabitlately,demandforenergyandcommoditiesremainsstrong,whichislikelytokeepoilandcommoditypriceshighandtoincreasetheimportbillforChinaandotherAsiancountries—yetanothersourceofreducedpressureontheRMB.Indeed,aslongasoildemandremainsfirmandgeopoliticalriskspersist,thenegativeimpactonAsia’soilimportingcountriesandconcomitant,market-drivendownwardpressureonitscurrencieswillnotdissipate.

China’sShakyFundamentals

Perhapsmostimportant,thesharpcyclicalupswingsincetheendoftheSARScrisisismaskingChina’sshakyfundamentalstotheoutsideworld.Despitemodernfactories,spankingnewairports,highways,andshoppingmalls,China’ssocialandfinancialinstitutionsareperhapscomparabletothoseoftheU.S.inthelate19thcenturyperiodofthe“RobberBarons.”A2003pollconductedbyPekingUniversityofabout100ChinaexpertsshowsthatonethirdofthembelievetherewillbeamajorcrisisinChinabefore2010.Whatisthemostlikelysourceofcrisis?

Themostfrequentlymentionedaresocial（21percent）,financial（19percent）,economic（12percent）,andemployment（10percent）.Rapidgrowthoverthelasttwodecadeshasincreasedincomeandsocialinequality,environmentaldegradation,andregionaldisparity.Theincompletetransitionfromacentrally-plannedeconomytoamarketeconomyunderauthoritarianrulehasenrichedtheeliteandeconomicopportunistsatthecostofgeneratingalargeunderclassanderodingpublicwealth.AssomeChineseeconomistspointout,manyChineselocalgovernmentsareeffectivelybrokeandeventuallywillneedacentralgovernmentbail-out.

ReminiscentoftheageoftheU.S.“RobberBarons,”thewidespread,systematiccorruptionandabuseofpowerisestimatedtocostasmuchas14percentofChina’sGDPperyear.Thefinancialsystem—whichincludesthebanking,securities,andinsurancesectorsneedsanurgentoverhaultoimproveefficiencyandbereadyforforeigncompetitionunderChina’sWTOcommitment.Jobcreationremainsadauntingchallengegivencontinuedeffortsattransformingthestate-owned-enterprisesandimprovingproductivitygrowth.Thentherearelong