Zhou Xiaochuan, governor of the People's Bank of China, said at the 17 Beijing Fortune Forum that the direction of RMB exchange rate reform is firm, but it will not be hastily introduced.
Editor's Note: Recently, RMB appreciation has once again become the focus of media attention at home and abroad. The United States, Japan and even the European Union all want RMB to appreciate as soon as possible, but our government insists that RMB exchange rate reform needs to choose the right time. So, why should western countries force RMB to appreciate? What are the advantages and disadvantages of RMB appreciation for us? In this regard, this newspaper invited experts to make a detailed interpretation.
To discuss the appreciation of RMB, we must first objectively analyze its advantages and disadvantages before we can draw a fair conclusion.
It can stimulate consumption and ease trade friction.
If the RMB appreciates moderately, it can bring four benefits to China:
First, expand the demand of domestic consumers for imported products, so that they can get more benefits. The most obvious change brought by the appreciation of RMB to domestic consumers is that the RMB in hand is "more valuable". If you study abroad or travel, you will spend less money than before; In other words, spending the same money can make you do more things than before. If you buy imported cars or other imported products, you will find that their prices have become "cheap" and ordinary people have gained more benefits.
Second, reduce the cost burden of imported energy and raw materials. China is a country lacking in resources. With the increase of international energy and raw material prices, domestic enterprises are bound to bear more and more heavy cost burden. In 2004, the average price of refined oil imported from China increased by 30.8% compared with 2003, steel increased by 43.7%, copper increased by 50.4%, and iron ore increased by 1 times. The rising prices of imported energy and raw materials will not only raise the prices of the whole basic means of production, but also devour the profits of enterprises in the middle and lower reaches of the industrial chain, making their profitability decline or even lose money. If the RMB appreciates to a reasonable level, it will greatly reduce the burden of importing energy and raw materials in China, and enable domestic enterprises to reduce costs and enhance their competitiveness.
Third, it is conducive to promoting the adjustment of China's industrial structure and enhancing China's position in the international division of labor. For a long time, China relied on the expansion of cheap labor-intensive products to implement the export-oriented strategy, which made the export structure not optimized for a long time and made China play the role of "world wage earners" in the international division of labor. Appropriate appreciation of RMB will help export enterprises to improve their technical level and product grade, thus promoting the adjustment of China's industrial structure and improving China's position in the international division of labor.
Fourth, it helps to ease the relationship between China and its major trading partners. In view of the rapid development of China's export trade and the increasing trade surplus, China's major trading partners have repeatedly demanded RMB appreciation. In this regard, simply saying "no" seems encouraging, but it doesn't help. Because this will continue to worsen China's relations with them and set obstacles for China's foreign trade and economic development. In recent years, the sharp increase of anti-dumping cases against China is a very convincing evidence. A proper appreciation of RMB will not only help to ease the relationship between China and its major trading partners, reduce economic and trade disputes, but also help to establish a good international image of China as a big country.
It is not conducive to attracting foreign investment and affecting market stability.
If the appreciation of RMB is too large, or the timing is wrong, it will bring five disadvantages:
First, it will hit China's export enterprises, especially labor-intensive enterprises. In the international market, the export price of China products, especially labor-intensive products, is far lower than that of similar products in other countries. The reason is that China's labor price is low, and the fierce domestic competition makes export enterprises compete to adopt the strategy of selling at a low price and paying no expense. Once the RMB appreciates, in order to keep the bottom line of RMB price unchanged, the price of China's export products in foreign currency will increase and weaken its price competitiveness; If the foreign currency price of export products remains unchanged, it will inevitably squeeze the profit space of export enterprises and have an impact on export enterprises, especially labor-intensive enterprises.
Second, it is not conducive to the introduction of foreign direct investment in China. China is the country that attracts the most foreign direct investment in the world. At present, foreign-funded enterprises are playing a more and more obvious role in China's industry, agriculture, service industry and other fields, which has a great impact on promoting technological progress, increasing employment and expanding exports, thus promoting the development of the entire national economy. The appreciation of RMB will not have a substantial impact on foreign investors who have already invested in China, but it will have a negative impact on foreign investors who are about to invest in China, because it will increase their investment costs. In this case, they may transfer their investment to other developing countries.
Third, increase domestic employment pressure. The impact of RMB appreciation on export enterprises and overseas direct investment will eventually be reflected in employment. Because most of China's export products are labor-intensive products, blocked exports will inevitably increase employment pressure; Foreign-funded enterprises are one of the departments that provide the most new jobs, and the slowdown of foreign investment growth will make the domestic employment situation more severe.
Fourth, it affects the stability of financial markets. If the RMB appreciates, a large number of short-term speculative funds abroad will seize the opportunity to speculate on the RMB exchange rate. Under the condition that the development of China's financial market is not perfect, it will easily lead to financial and monetary crisis. In addition, the appreciation of RMB will further increase the actual amount of existing non-performing assets of banks in US dollars, which is not conducive to the reform of the entire banking industry and the adjustment of debt structure.
Fifth, the huge foreign exchange reserves will face the threat of shrinking. At present, China's foreign exchange reserves are as high as US$ 659,654.38 billion, ranking second in the world after Japan. Adequate foreign exchange reserves are an important symbol of China's growing economic strength and improving the level of opening up to the outside world, and also a powerful guarantee for us to promote domestic economic development and participate in foreign economic activities. However, once the RMB appreciates, the huge foreign exchange reserves will face the threat of shrinking. If RMB appreciates by 10% against USD and other major convertible currencies, China's foreign exchange reserves will shrink by 10%. This is a serious problem that we have to face.
Reforming the current exchange rate system is the general trend.
Thus, RMB appreciation is like a double-edged sword, which has both advantages and disadvantages. In my opinion, the appreciation of RMB should be examined in a deeper context, rather than on its own merits.
The current exchange rate system of RMB pegged to the US dollar was determined by 1994. The advantage of pegging the US dollar is that it can anchor China's domestic prices, reduce the risk of exchange rate fluctuations, and thus promote the development of foreign trade and the inflow of foreign capital. The disadvantage is that it cannot flexibly cope with external economic changes. At present, great changes have taken place in the economic situation at home and abroad, especially the continuous decline of the US dollar exchange rate. Under this background, if we still stick to the exchange rate system of pegged to the US dollar, it will be difficult for us to meet the needs of economic development and changes at home and abroad. Therefore, it is an inevitable policy choice for China to implement a flexible exchange rate system and make the RMB appreciate moderately.
As for the negative impact of RMB appreciation, we should objectively analyze it and take necessary measures to solve it. For example, although moderate appreciation will have a certain impact on exports, we should see that the price competitiveness of China's export products, especially labor-intensive products, is very strong. Even if RMB appreciates by 10%, this advantage cannot be fundamentally shaken. In addition, appreciation can encourage enterprises to turn pressure into motivation and enhance their competitiveness by tapping potential and innovation. During the Asian financial crisis, China's export trade still achieved remarkable growth performance, which is a strong evidence of the sharp depreciation of the currencies of Southeast Asian countries with roughly the same export structure as China. For another example, although moderate appreciation will threaten to shrink China's foreign exchange reserves, this threat can be minimized by controlling the reserve scale, optimizing the reserve currency and adjusting the reserve form.
Global Times (version 13, May 30, 2005)
On the Influence of RMB Appreciation on Economy
The most direct consequence of RMB appreciation is that the export price of China products increases, the cost of export enterprises increases by 2% invisibly, and the competitiveness of China products decreases. The industry that bears the brunt is undoubtedly the textile industry, which attracts the largest number of employees and has the lowest profit. After the appreciation of RMB, the textile industry may lose money. If the adjustment is improper, a large number of people will lose their jobs, which will lead to social problems. On the other hand, an industry in a country can meet the needs of the whole world, which is itself a manifestation of excess and needs to be adjusted urgently. After the adjustment, the core competitiveness of the industry, the added value of the industry and the ability to resist exchange rate fluctuations will be improved. More importantly, the rationality of currency value will greatly reduce trade friction and increase the space for economic and trade exchanges between countries. Compared with "full market economy status", a flexible exchange rate mechanism will definitely take precedence.
For the capital market, the appreciation of RMB means the overnight appreciation of assets denominated in RMB, while the A-shares in China stock market are denominated in RMB, which means the overall appreciation of the market value of A-shares. More importantly, the appreciation of RMB 2% is only the beginning of appreciation in the market, and the appreciation space of RMB "futures" is far more than that. On July 23rd, the discount of overseas non-deliverable forward foreign exchange (NDF) on the one-year main contract of RMB was significantly reduced to 40 1 1 point, which indicates that RMB will reach 7.7 1 yuan one year later. Therefore, the value of A shares will still have "appreciation expectation", and we believe that RMB appreciation will become a long-term positive existence in the A-share market. On the other hand, in the real estate market, the appreciation of RMB has little influence on the overall trend of housing prices, because the China government will not relax its tightening policy on real estate in the second half of the year. On the one hand, it is difficult for speculative funds to enter the property market because of regulation; On the other hand, due to policy restrictions, speculative funds that have already entered are hard to escape.
The latest statistics show that in the second quarter, many industries fell into overcapacity, and more economists worried that "deflation" would lead to a hard landing. The economic indicators of Guangdong, Zhejiang and other major economic provinces also fell sharply. Recently, the investment in the Pearl River Delta and the Yangtze River Delta has gradually become saturated. Shanghai's high cost and high land price have led to the hollowing out of industries and the relocation of a large number of factories, which has increased opportunities in the north. In this context, it is imperative to accelerate the upgrading of industrial structure in the above areas. We believe that the appreciation of RMB brings regional economic balance and economic structure transformation, which leads to the spread of traditional industries from coastal areas to central and western regions, and the shift of economic growth focus to the Bohai Economic Circle. On the one hand, the economic growth rate of Zhejiang and Guangdong continued to decrease slightly, mainly due to the industrial hollowing out and the slowdown of foreign trade growth caused by the unsynchronized industrial transfer and industrial upgrading. On the other hand, Zhejiang capital with the highest density of private capital in China will accelerate its outflow, mainly to the infrastructure construction in the central and western regions and to the secondary and tertiary industries in the Bohai Economic Circle. In this way, Zhejiang and Guangdong provinces will face unprecedented challenges. Due to the special economic environment and political background, we are still optimistic that Shanghai will continue to maintain a high growth trend.