Yu Yongding Director, Institute of World Economics and Politics, Chinese Academy of Social Sciences
The depreciation of the yen is beneficial to Japan's exports, thus helping to stimulate the domestic economy. However, the sharp depreciation of the yen has damaged the Japanese government's long-term efforts to make the yen an important international settlement and reserve currency. The depreciation of the yen and its expectation led to a sharp drop in the Japanese stock market (which in turn promoted the depreciation of the yen), which worsened the situation of bad debts in Japan. It reduces the capital adequacy ratio of Japanese banks with a large number of overseas assets, further exacerbating the instability of their financial system. At the same time, it will aggravate the economic recession and financial chaos in Asian countries. Asian countries are Japan's main capital exporters and trade targets, and this recession and chaos will in turn harm Japan's own interests. In short, the depreciation of the yen has both advantages and disadvantages for Japan itself, but excessive depreciation is likely to do more harm than good. Since the 1990s, Japan's dependence on external demand has greatly decreased. At present, exports only account for about 10% of GDP, and net exports only account for 1%-2% of GDP. The GDP of 1990- 1997 increased by 2. 15% on average, while the contribution of net exports was only 0. 14 percentage points. If Japan wants to achieve economic growth, it must first ensure the growth of household consumption, then the growth of investment, then the growth of government expenditure, and finally the growth of net exports. It is not feasible to maintain the rapid growth of exports through the depreciation of the yen to promote the growth of the entire national economy.
Now, some Japanese economists and government officials hope to create inflation through the increase in import prices caused by depreciation, and break the vicious circle of deflation and real debt increase through the formation of inflation expectations. This is an argument that has never appeared in 1998. This idea is puzzling. Stimulating the economy by raising import prices is tantamount to seeking fish from the edge of a tree. Of course, exchange rate depreciation can be the result of expansionary monetary policy, not the policy goal itself. In order to increase the circulation of the base currency, Japanese banks may directly buy US dollar assets, especially US Treasury bonds. However, in the deflationary situation, even if the base currency is expanded, the effective demand may not necessarily increase. Perhaps because of this consideration, the governor of the Bank of Japan expressed a different view from the Ministry of Finance, arguing that it is not good to guide the yen to fall, and he did not want to see the yen fall to the level of 13 1 yen against 1 dollar.
If we only look at the fundamentals this year (Japan-US macroeconomic situation comparison, Japan-US interest spread, Japan-US government macroeconomic policy comparison, etc.). ), compared with the previous situation, the attractiveness of the United States to funds will be reduced, and the funds flowing from Japan to the United States will be reduced. This will bring depreciation pressure to the dollar. At the same time, under normal circumstances, the demand for external funds in the United States will decrease due to the economic recession (the United States will reduce its foreign trade deficit due to the increase of domestic savings). This reduction in capital demand (the reduction of foreign trade deficit) will offset the depreciation pressure of the US dollar caused by the reduction of external capital supply to a certain extent. Therefore, the exchange rate of the yen against the US dollar is likely to remain unchanged, depreciate (if Japan's economic growth prospects deteriorate further) and appreciate this year. However, if the Japanese government intends to guide the yen to depreciate, the yen may fluctuate in the range of 130 yen to 1 US dollar for some time. Generally speaking, it is unlikely that the yen will fall further. Although the depreciation of the yen against the US dollar is accelerating at present, due to the ineffectiveness of the depreciation of the yen and the side effects on the Japanese economy, the momentum of depreciation will be weakened. What's more, the US government should not tolerate the excessive depreciation of the yen. In addition, it is not ruled out that the yen will rise by a large margin due to the withdrawal of funds from financial institutions such as Japanese commercial banks.
What about the RMB when the yen depreciates?
Director of Zhang Shuguang Tianze Institute
With the decline of China's exports and the depreciation of the yen, the exchange rate policy has also become a concern. In the middle of last year, when exports fell, someone raised the issue of using exchange rate depreciation to promote exports. While the world economy is moving from serious stagnation to recession, China's economy is still growing at a high speed, and the real exchange rate of RMB is still appreciating. Recently, in order to save the Japanese economy that has been sluggish for ten years, the Japanese government not only deliberately devalued the yen, but also devalued the yen to 134 yen 1 US dollar, and pressured the RMB exchange rate to appreciate. China also gave a tit-for-tat warning about the depreciation of the yen. In fact, the depreciation of the yen can neither save the Japanese economy nor maintain it. The fundamental reason of Japanese economy is not external, but internal, which lies in the system and structure of Japanese economy. As far as exchange rate policy is concerned, it is a double-edged sword. Devaluation can promote exports and curb imports at the same time. Japan's export proportion is not large, and its import proportion is not small. The pros and cons of devaluation are hard to say.
As far as the RMB exchange rate is concerned, I think it is appropriate to sit tight at present, but it needs long-term consideration and arrangement. First, don't arbitrarily claim that the RMB will not depreciate; Second, it is necessary to determine the maximum extent to which RMB can tolerate the depreciation of the yen and pay close attention to the trend of the yen; Third, expand the floating range of RMB exchange rate; Fourth, we should take the opportunity to speed up the repayment of yen debt; Fifth, take advantage of the strong position of RMB to accelerate the establishment of a currency linkage mechanism in Asia (mainly East Asia and Southeast Asia). This may be an important or more realistic step in the proposed establishment of free trade zones with ASEAN and Hong Kong and Macao. Because the biggest danger of yen depreciation is that it may lead to the devaluation of competitive currencies in Asian countries, which in turn will worsen the external environment of the whole economy.
China should adopt a more flexible exchange rate policy
Liang, Ph.D. in Economics, Institute of Finance and Trade Economics, China Academy of Social Sciences
In the face of the recent worldwide economic recession, the Japanese government, in order to improve the trade situation, restore its own economy, manipulate the foreign exchange market, and let the yen depreciate sharply, has aroused widespread concern in the international community and governments around the world. As the second largest economy in the world today, Japan's sharp depreciation of the yen will inevitably have a huge impact on the international economy and aggravate the world economic recession. While criticizing the Japanese government's irresponsible behavior, we should also reflect on China's current economic policy, especially the exchange rate policy, especially under the macro background of China's entry into WTO and the trend of economic internationalization.
In an open economy, exchange rate policy is one of the most important tools for a country to maintain economic stability and achieve economic growth. In a closed economy, a country's economic activities are relatively simple, and the problems faced by the government in economic development-internal balance-are also relatively simple, which can be solved by planning means, fiscal policy, monetary policy and other policies. Under the open conditions, due to the participation of external factors, there may be conflicts between the internal and external economies of a country's economy. The internal and external economic balance has become the key to be solved in the government's economic development, and the realization of internal and external balance cannot be separated from the application of exchange rate policy. By intervening in the foreign exchange market, a government adjusts the supply and demand of foreign exchange and the exchange rate level of relative price, thereby expanding exports, improving the balance of payments and promoting economic growth. With the improvement of economic marketization and openness, exchange rate policy plays an increasingly important role.
Generally speaking, after the reform and opening-up, our government used fiscal policy and monetary policy more, but seldom used exchange rate policy, which is closely related to our current exchange rate system. At present, China implements a "managed floating exchange rate system", which is essentially a fixed exchange rate system linked to the US dollar. Its policy operation space is very small and lacks due flexibility. With China's entry into WTO and the rapid development of global economic integration, the integration of China's economy into the world economy is bound to accelerate, which requires China's monetary authorities to adopt a pragmatic attitude and a flexible exchange rate policy to ensure the internal and external balance of the economy. Therefore, in the face of the turbulent international economic environment, the China government should take the opportunity of joining the WTO to seriously and prudently evaluate the current exchange rate system and exchange rate policy, and adopt more flexible exchange rate system and exchange rate policy when necessary to promote long-term stable and healthy economic development.
What impact does the depreciation of the yen have on China's economy?
Ma Shuanyou, Ph.D. in Economics, Institute of Finance and Trade, China Academy of Social Sciences
The Japanese government acquiesced in the depreciation of the yen to stimulate exports, and raised the domestic price level to curb deflation by raising the prices of imported products. This is an irresponsible behavior in itself, which is inconsistent with its status as an economic power, because it has a great impact on Asia's economy and currency. Up to now, the Korean won, the new Taiwan dollar, the Singapore dollar and the Thai baht have all depreciated to varying degrees. The impact of the depreciation of the yen on China's economy can be analyzed from three aspects:
First, the depreciation of the yen affects China's total demand. Japan is China's largest trading partner, China's exports to Japan are second only to those to the United States and Hongkong, and Japan is also China's largest source of imports. In 2000, China's exports to Japan accounted for 16.7% of its total exports, while imports from Japan accounted for 18.4% of its total imports. The depreciation of the yen directly reduces China's exports to Japan and expands China's imports from Japan, thus expanding the trade deficit. Considering that China's export structure is not directly competitive with Japan, the depreciation of the yen will indirectly affect China's external demand. The depreciation of the Japanese yen leads to the depreciation of other Asian currencies, and the appreciation of China's RMB against these countries is not conducive to China's exports to Asia. On the other hand, due to the devaluation of these countries' currencies, the price competitiveness of their products has been improved, which has also greatly impacted China's exports outside Asia. In addition, the depreciation of the yen will affect Japanese companies' direct investment in China, thus affecting China's investment demand. Therefore, the role of yen depreciation in China's external demand should not be underestimated.
Secondly, the depreciation of the yen causes the redistribution of international wealth.
There are two points related to China: First, the value of Japanese yen assets in China's foreign exchange reserves has shrunk, causing losses; Second, from the perspective of foreign debt, the Japanese yen foreign debt undertaken by our government and enterprises has decreased, thus benefiting. For example, in194, the Ministry of Finance issued 60 billion yen of seven-year and 10-year samurai bonds, and in 195, it issued 100 billion yen of 20-year samurai bonds. The depreciation of the yen lightened China's foreign debt burden. However, the net impact of yen depreciation on redistribution depends on the comparison between China's yen assets and its foreign debt.
Third, the depreciation of the yen has produced the pressure of RMB depreciation. At present, because China implements a managed floating exchange rate system, which is not a real floating exchange rate system, and China has enough foreign exchange reserves to attract more international capital inflows, economic growth is still outstanding in the world, and the depreciation of the yen will not directly impact the RMB exchange rate. However, after China's entry into WTO, the financial market will be gradually opened, the connection between the capital market and the international market will be strengthened, and the floating range of exchange rate will be gradually relaxed. The depreciation of the Japanese yen and the devaluation of Asian currencies caused by it may aggravate the exchange rate fluctuation in China. At present, China is politically responsible for keeping the RMB exchange rate unchanged and maintaining the economic stability in Asia, but China's tolerance is limited. 1998 during the Asian financial crisis, the China administration made it clear to the United States and Japan that the exchange rate of 1: 135 was unacceptable, forcing the two countries to intervene in the foreign exchange market and support the recovery of the yen. This time, if the yen depreciates excessively and exceeds our tolerance, such as the exchange rate of 140 yen to 1 US dollar, it will seriously affect China's economic growth, which is also extremely unfavorable to the stable growth of Asia and even the world economy. At that time, the possibility that the RMB will be forced to depreciate will not be ruled out.
Beware of the long-term economic intention behind the depreciation of the yen
Li Zaohang, Vice President of China Bank
Recently, the exchange rate of the Japanese yen against the US dollar continued to fall, with the lowest falling below the 1 US dollar mark to 134 yen. The sharp depreciation of the Japanese yen has once again become the focus of discussion, and it has also attracted extensive attention from the international community, especially the governments of Southeast Asian countries and China. Some people think that the depreciation of the yen is the inevitable result of Japan's long-term economic downturn in the past decade, and it is a last resort for the Japanese government to give up market intervention in the yen. I don't agree with the above view. Last year, I visited Japan, but I didn't feel the depression of Japanese economy. Judging from the current economic indicators such as Japan's balance of payments, international capital flow, bank assets quality and high-tech products representing the new economy, Japan's economy can't be called a good one, but it can't be called a serious recession. Personally, I think that the so-called economic recession is one of the strategies of the Japanese government to implement "recession economy" in its external propaganda, with the aim of covering up its economic strength and providing an excuse for the government to intervene in the economy.
I'm afraid there are three backgrounds for this sharp depreciation of the yen: first, the economic downturn and recession in the United States since last year, especially the September 1 1 incident; Second, euro cash has been circulating in EU 1 2 countries since June 2002; Third, despite the general recession in the world economy, China's economy has maintained a growth rate of more than 7%. In this context, Japan can "kill three birds with one stone" by depreciating the yen, that is, transfer the economic pressure caused by the recession of the United States to Southeast Asian countries and China, suppress the euro at the beginning of its cash flow, and avoid it from challenging the hegemony of the dollar and the yen, squeezing the external space for China's sustained economic growth and weakening the internal driving force for China's economic growth. From this point of view, the depreciation of the yen is by no means a simple economic problem, and there is a strong long-term economic intention behind it.
In this case, the China government should actively respond from two aspects. First, continue to implement the economic development strategy of expanding domestic demand. At present, our government should take advantage of the great opportunity of China's entry into WTO to deepen system reform and innovation from two aspects: expanding effective demand and providing effective supply, so as to seek lasting impetus for economic growth, effectively improve the income level of urban and rural residents and maintain sustained and healthy economic development; Second, the central monetary authority should consider adjusting the current relatively fixed exchange rate system to a more flexible exchange rate system, and appropriately devalue the RMB when necessary, so as to alleviate the enormous pressure on economic growth caused by export difficulties since the Southeast Asian financial crisis.
Three major effects of yen depreciation: gaining profits, gaining momentum and containing opponents.
Cui is a postdoctoral fellow at the Institute of Finance, Trade and Economics, China Academy of Social Sciences.
Since the collapse of the bubble economy, Japan's economy has never recovered. This situation appeared when the Japanese authorities implemented loose monetary policy and expansionary fiscal policy. The ultra-low interest rate has reached the edge of "interest rate trap", and the expansionary fiscal policy makes the general accounting expenditure depend on public debt as high as 34.3%. The "9. 1 1 incident" made the Japanese economy worse. There is no hope of stimulating economic growth through "expanding domestic demand", so our eyes naturally turn to "expand external demand". Economic growth to expand external demand is driven by currency depreciation. This means of "foreign exchange dumping" can objectively play a radical role in the Japanese economy. This is the first major policy effect of yen depreciation-economic profit.
At the Fifth ASEAN-China Leaders' Meeting held in Brunei last June, China and ASEAN reached an agreement on establishing a China-ASEAN Free Trade Area. With Chinese mainland and Taiwan Province Province, as well as Hong Kong and Macao, joining the WTO, the China government is making efforts to promote economic integration among the four places across the Taiwan Strait. In this regard, Japan has aggravated the sense of crisis. The depreciation of the yen is a beggar-thy-neighbor practice. However, the denunciation and the call for responsibility caused by this objectively prove and remind Asian countries that Japan is still the leader and core of the Asian economy. Use the method of losing power to achieve the purpose of gaining power, because today's world is still a world where strength speaks. This is the second major policy effect of the depreciation of the yen-political gains.
After joining WTO, China will face the pressure of trade balance. On the one hand, due to tariff concessions and the abolition of some non-tariff barriers, imports will increase rapidly. On the other hand, due to the obvious slowdown in world economic growth and the decline in world market demand, foreign trade exports are facing considerable difficulties and pressures. Japan has been China's largest trading partner for nine consecutive years. The depreciation of the yen will restrict the export of China products to Japan and encourage China enterprises to import Japanese products. The depreciation of the yen will make China's foreign trade situation more severe in 2002. Once the current account deficit occurs, China's foreign exchange reserves will be affected. At the same time, part of domestic demand will be converted into demand for net imports, and the policy effect of stimulating economic growth by expanding domestic demand will be greatly reduced, thus shaking the economic foundation of the RMB. The depreciation of the yen directly threatens the stability of the RMB. The United States has dollars, Europe has euros, and who is in charge of the ups and downs in Asia? The depreciation of the yen, taking retreat as progress, can curb the strength of the renminbi. This is the third major policy effect including the depreciation of Japanese yen opponents.
The beggar-thy-neighbor strategy may not benefit others.
Ma Wang Jun, Ph.D., Institute of Finance and Trade Economics, China Academy of Social Sciences.
After World War II, international economic nationalism gradually replaced the free trade policy, and the interests of the nation-state became clearer and clearer. Replacing external balance with internal balance has become the primary goal of governments. The rise of the middle class and its growing strength have strengthened this trend. They care about stable employment opportunities and stable income prospects. In political elections, the middle voters decide the formation of policies, and politicians often make the goals of the middle voters come true in order to get the most votes.
When the world economy is in depression, the sharp depreciation of the yen has once again attracted the attention of the world, especially the people of East Asian countries. From the perspective of the above political economy, it is not difficult to find the answer. As we all know, Japan has not been able to get out of the shadow of recession since the early 1990s. At present, the unemployment rate remains high, and the economic growth rate is expected to be negative this year. In the case that fiscal policy and monetary policy are powerless, from the perspective of Japan's domestic interests, the depreciation of the yen seems to be a last resort. Although structural contradictions are a chronic disease of Japan's economy, if delaying reform can be exchanged for political stability, politicians will not mind devoting themselves to structural adjustment and institutional reform, and at the same time try other means that seem to be more immediate. But from the outside, the depreciation of the yen is objectively equivalent to passing on the domestic crisis to others. I'm afraid people won't forget that in the 1930s and early 1980s, faced with the worldwide depression, western countries sought egoistic foreign policies one after another. As a result, the global economy has deteriorated rapidly and no one can protect himself. Just a few years ago, in the Asian financial turmoil, the yen depreciated sharply, but did Japan get the economic turnaround it needed?
Although Japan's beggar-thy-neighbor behavior may not be effective, it is still desperate again. It is the "law of the jungle" prevailing in the international community that condones this kind of behavior that harms others and does not benefit others. If a world's second largest economy earns enough seigniorage from other countries by issuing world currency, but ignores its obligation to maintain international economic stability when the world economy is in recession, is the rationality of such an international economic order worth rethinking? Under the condition of open economy, especially after the disintegration of the fixed exchange rate system, countries generally adopt the adjustment of the value of local currency relative to foreign currency as a means to achieve domestic economic balance. Paradoxically, once countries adopt egoistic policies one after another, all countries will suffer losses through the fallacy of combined effect. It is precisely because of this that China should not only call for more flexible exchange rate system and other technical requirements when seeking the coping strategies for the depreciation of the yen, but also give China its due voice as a responsible developing country in promoting the establishment of a fair and reasonable new international economic order.