罗纳德 麦金农 中国盯住汇率制度与日本经验评价.docx

罗纳德 麦金农 中国盯住汇率制度与日本经验评价.docx

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罗纳德麦金农中国盯住汇率制度与日本经验评价

WhyChinaShouldKeepitsExchangeRatePeggedtotheDollar:

AHistoricalPerspectivefromJapan

RonaldMcKinnon1

StanfordUniversity

China’sfixeditsexchangerateat8.28yuantothedollarfrom1994toJuly21,2005,andhasonlyallowedasmall,tightlycontrolled,appreciationsincethen.China’sproductivitygrowthhasbeenveryhighrelativetomostothercountries,itstradesurplushasbeenrising,anditcontinuestoaccumulatelargedollarexchangereserves.Theresulthasbeen“Chinabashing”withstrongAmericanpressureonChinatoappreciatefurther.

AlthoughappreciationneednotreduceChina’stradesurplus,thethreatthereofwillreducenominalinterestrates—ashappenedintheearliererafrom1978to1995of“Japanbashing”andyenappreciation.Theresultingdeflationfromtheovervaluedyen,coupledwithazerointerestliquiditytrap,ledtoJapan’s“lostdecade”ofthe1990s.ItcouldhappentoChinainthenewmillennium.

FromJapanBashingtoChinaBashing

Sincetheearly1980s,structuralfiscaldeficitsintheUnitedStatesandverylowpersonalsavinghavecontributedtorising“globalimbalances”,i.e.,arisingU.S.currentaccountdeficitfinancedbyheavyborrowingbytheUnitedStatesindollarsfromtherestoftheworld.2Withonlyabriefrespiteinthelastquarterof1991whentheU.Scurrentaccountbrieflytouchedzero,Figure1showstheU.S.deficitapproaching7percentofGDPin2006.MuchoftherealcounterpartofthisfinancialtransfercomesfromthehighsavingEastAsiancountries,principallyJapanandnowChina,collectivelyrunninglargetradesurpluses,mainlyinmanufactures,withtheUnitedStates.（Figure1showstheirsurplusesasaproportionoftheirsmallerGDPs）.However,since2003,thesurplusesofthepetroleumproducingcountrieshavealsobecomeimportant.

ThemanufacturingtradesurplusesoftheEastAsiancountries,incombinationwithexchangeratestabilizationagainstthedollar,resultedinlargeaccumulationsofofficialexchangereserves（mainlydollars）.TheseledtoincreasingmercantilistpressurefromEuropeandtheUnitedStatesforAsiancountriestoappreciatetheircurrencies.Inparticular,China,acountrywithremarkablyhighsavingrelativetoitshugedomesticinvestment,hascomeunderheavyforeignpressuretoappreciatetherenminbiin20052006—onthewidelyheldbeliefthatitwouldreduceitscorrespondinglylargetrade（saving）surpluses.

ThecurrentU.S.ChinatradefrictionsarereminiscentofU.S.Japanfrictionsfromthe1970sthroughto1995.TherisingpenetrationofJapanesemanufacturedgoodsintotheAmericanmarketledtoapoliticalphenomenonpopularlyknownas“Japanbashing”.Episodically,theJapanesegovernmentrespondedtoAmericanthreatsoftradesanctionsanddemandsthattheyenbeappreciatedbyimposing“voluntary”constraintsonparticularexportstotheUnitedStatesandbyallowingtheyentoappreciate.Theyenroseallthewayfrom360tothedollarinAugust1971toapeakof80tothedollarinApril1995.McKinnonandOhno（1997）showedthattheeverhigheryencausedadeflationaryslumpintheJapaneseeconomywithazerointerestrateliquiditytrap,butwithoutreducingJapan’scurrentaccountsurplusesmeasuredasaproportionofitsGNP.

WorriedabouttheslumpingJapaneseeconomy,theU.S.TreasurySecretary,RobertRubininApril1995announcedanew“strongdollar”policy,afterwhichJapanbashingmoreorlessceased.AlthoughawelcomechangeinAmericanpolicy,itcametoolatetopreventJapan’s“lostdecade”ofthe1990s.

Japanbashingfrom1978to1995occurredwhenJapanhadtheworld’slargestbilateraltradesurpluswiththeUnitedStates（Figure2）.JapanwasthenAmerica’sforemostindustrialcompetitor—notonlyinheavyindustrysuchassteel,autosandmachinetoolsbutalsoinhightechnologysuchascolortelevisionsandsemiconductors.

America’sprotectionistthreatswereusuallyspecifictoaparticularindustrywithinsomeshorttimeframe.TheJapanesewouldoftenrespondseriallybytemporarilyrestrainingexportsinsteel,autos,semiconductors,andsoon.Butalsogeneralyenappreciation,whichwasnottemporary,oftenaccompaniedthesespecificindustrialdisputes—resultingin“thesyndromeoftheeverhigheryen”（McKinnonandOhno,Ch.1）.

Inthenewmillennium,historyisrepeatingitself.ChinabashingisnowsupersedingJapanbashing.Figure2showsChina’sbilateraltradesurpluswiththeUnitedStatesrisingfrombeingtriviallysmallinthe1980stoequalJapan’sby2000,andthenbecomingmorethantwiceaslargeasJapan’sin2005—nowreachingmorethan1.5percentofAmerica’sGDP.

UnlikeJapan’searliermoreconcentratedexportsurgesintospecificAmericanmarketsforadvancedmanufactures,China’sexportsurgeismoreinlightandmediumtechindustryandis“acrosstheboard”.Chinahasbecomemainlyanexporteroffinishedconsumergoods.ValueaddedinmostindividualChineseproductsisnothighbecauseinputsofcapitalgoods,subassemblies,andavarietyindustrialinputsincludingbasicmineralsandpetroleumproductsarelargelyimported.ChinaismerelythefaceofaworldwideexportsurgeintothesavingdeficientAmericaneconomy.BothJapanandGermanyaswellasseveralsmallerEastAsiancountriesnowhavebilateraltradesurpluseswithChina.Nevertheless,atChristmastime,whenAmericanfamiliesopentheirpresents,theyseemainlymadeinChinalabels!

Whilegoodforconsumers,producersblamecontractingemploymentinAmericanmanufacturingoncompetitionfromChinesemanufactures.TheconsequentriseinChinabashingismorefocusedondemandingthattherenminbibeappreciatedtoreducetheinternationalcompetitivenessofChineseindustrygenerally,ratherthanonindustryspecificprotectionismasintheearlierJapaneseexperience3.Otherthancontinualjawboning,AmericanofficialpressureonChinatoappreciatehastakentwospecificforms.FirstisabillintroducedintotheU.S.CongressinMarch2005toimposea27.5percenttariffonallU.S.importsfromChinaunlesstherenminbiwassubstantiallyappreciated.ThiswouldhavebeenanegregiousviolationofAmerica’sWTOcommitments.Ifpassed,itwouldbesimilartothe“Nixonshock”ofAugust1971whenheimposedatariffonimportedmanufacturesthatwasnotrescindeduntilalltheindustrialcountries—includingJapanbutnotChina—agreedtoappreciateinDecember1971.However,afterChinaspeededupitsrateofappreciationinAugustandSeptemberof2006,SenatorsSchumerofNewYorkandGrahamofSouthCarolinaagreedtowithdrawthebill.Butnextyear,theythreatentocraftamoreWTOcompliantmeasuretoforceChinatofurtherreformitscurrencypractices.

Second,everyyearinMayunderSection3004ofU.S.PublicLaw100418,theSecretaryoftheTreasuryisrequiredtoassesswhethercountriessuchasChinathathaveglobalcurrentaccountsurpluses,orlargebilateraltradesurpluseswiththeUnitedStates,aremanipulatingexchangeratestopreventeffectivebalanceofpaymentsadjustmentortogainanunfairadvantageininternationaltrade,withunspecifiedsanctionstofollowifhedoes.InMay2006,afterbeingheavilylobbiedbyindustryandlaborgroupstosanctionChina,theSecretarynarrowlydecidednottoofficiallyclassifyChinatobeacurrencymanipulator.However,hewarnedthatthisdecisioncouldchangeinthefutureiftherenminbididnotappreciate,awarningbasedonthemistakenpresumptionthatanappreciationwouldreduceChina’stradesurplus.

Consequently,wenowliveinworldwhere,althoughtherenminbihasnotyetappreciatedverymuch,astrongexpectationexiststhatitwillbehigheragainstthedollarinthefuture.

ThePoliticalEconomyoftheTradeImbalance

ChinabashingnowandJapanbashingearlierisboth“political”and“economic”.

Onthepoliticalside,thelossofjobsinAmericanmanufacturingarousestheireoftradeunionsandtheNationalAssociationofManufacturers.Unsurprisingly,Congressmenfromstateswithlargemanufacturingsectorshavebeenthemostvociferousindemandingthatsomethingbedoneaboutit.BlamingforeignersformisalignedexchangeratesiseasierthanfacinguptotheproblemofinadequateprivatesavingandlargestructuralfiscaldeficitsintheUnitedStates.

Butpoliticalpopulismisonlypartoftheproblem.Badeconomictheorizingisatleastasculpable.Mostmainstreameconomistsbelievethatagovernmentscancontrolitsreal（inflationadjusted）exchangerate,andtherebycontroltherealtradebalance.

Unfortunately,thispresumptionhasbeencanonizedinamodelcalledtheelasticitiesapproachto（ormodelof）thebalanceoftrade.Becausethiselasticitiesmodelfocusesnarrowlyontherelativepriceeffectsofchangesinrealexchangerates,itisseriouslyincomplete.Therealityisthatgovernmentscanatmostcontrolnominalexchangerates,forwhichanychangecanonlybesustainedbyalteringthestanceofthenationalmonetarypolicy.Sothemacroeconomicrepercussionsofsustainedexchangeratechangesarelarge,andnotadequatelytreatedwithintheelasticitiesmodel.

Foraninternationalcreditor,asaremostEastAsianeconomies,theincomeandspendingrepercussionsofasharpdiscreteappreciationagainsttheworld’sdominantmoneyaresostrongthattheeffectofcurrencyappreciationonitstradesurplusisambiguous.Toseethis,letusfocusonhowacreditoreconomywithatradesurpluswouldreacttoadiscretecurrencyappreciationintheshortandmediumtermswhendomesticpricesremainsomewhat“sticky”.Becauseanappreciatingcountry’sexportsbecomeobviouslymoreexpensiveinworldmarketsanddecline,whereasimportslookcheaperinthedomesticc