Author: Zhang Shuguang | February 2006 14 16: 45.
On July 2 1 2005, the People's Bank of China issued the Announcement on Improving the Reform of RMB Exchange Rate Formation Mechanism, announcing that from now on, it will implement a managed floating exchange rate system based on market supply and demand with reference to a basket of currencies, and at the same time appreciate by 2%. On the same day 19: 00, "the transaction price of USD against RMB was adjusted to 1 USD against 8. 165438 0 yuan RMB as the middle price of designated inter-bank foreign exchange transactions in the inter-bank foreign exchange market the next day", and the actual daily transaction price still fluctuated within three thousandths of the middle price. This decision of the central bank temporarily ended the RMB exchange rate dispute since 2002. Now, the new exchange rate system and exchange rate formation have been in operation for nearly two months, and we can further observe and analyze it.
After the announcement of the central bank's decision, it was widely praised and welcomed by the international community. Public opinion at home and abroad responded enthusiastically, and the domestic and foreign markets responded positively. Subsequently, the central bank gradually clarified some details of the new system and adopted some further supporting reform measures. For example, on August 2, the central bank issued the Notice on Issues Related to Forward Settlement of Foreign Exchange and Opening RMB and Foreign Currency Swaps for Customers by Designated Foreign Exchange Banks. On August 8, the Notice on Accelerating the Development of the Foreign Exchange Market was issued, which expanded the trading subjects in the spot foreign exchange market, increased the inquiry trading methods in the foreign exchange market, and opened up the inter-bank forward foreign exchange trading. Generally speaking, the reform of exchange rate system and exchange rate adjustment have achieved remarkable success. As the Bank for International Settlements recently said in its quarterly report, "China's performance before and after the appreciation of the RMB in July has restrained the market's speculation on further appreciation of the RMB, effectively limiting the impact of RMB appreciation on the financial market", and said that "so far, China's policy makers seem to have well controlled the transition of the RMB to a more flexible exchange rate system, so there has not been a lot of selling of dollars as many people expected".
The biggest feature of this adjustment and reform is to abandon the single pegged exchange rate system and return to the managed floating exchange rate system. The exchange rate reform of 1994 not only abolished the foreign exchange quota and realized the exchange rate integration, but also set the reform goal of a managed floating exchange rate system and realized the free convertibility under the current account in 1996. From 65438 to 0997, Asian financial crisis broke out. In order to maintain domestic and world economic stability and promote Asian economic recovery, China insists on keeping the RMB exchange rate unchanged. Since then, China has returned from a nominally managed floating but actually fixed exchange rate system to a pegged exchange rate system. Despite the commitment to further opening up after China's entry into WTO, China's economy has developed rapidly in recent years, the production efficiency has been significantly improved, and the appreciation pressure at home and abroad has been constant. However, the fixed peg exchange rate system has been adhered to until this adjustment, which has formed the fear of exchange rate reform and adjustment to some extent. However, as an important parameter of price and macroeconomic adjustment between the two currencies, the exchange rate has remained unchanged for 78 years, but the actual economic situation has undergone tremendous changes, which is not normal, not only causing huge distortion of market signals and serious imbalance of domestic and foreign economies, but also worsening the international environment for China's economic development to some extent. This reform and adjustment finally broke the deadlock and brought China's exchange rate system and exchange rate level back to normal operation.
There are two kinds of biased understandings and comments on this exchange rate reform and adjustment. One is to emphasize exchange rate appreciation and ignore institutional changes, and even think that the new system is linked after appreciation. The other is to emphasize institutional adjustment and ignore exchange rate changes. Even after this reform and adjustment, we still insist on reforming the exchange rate system first and then adjusting the exchange rate level. The former is mostly the reaction and views of some people who advocate appreciation, especially some international people, while the latter is the views of some people who oppose appreciation. In fact, both are obviously one-sided. Although the appreciation rate is relatively small, only 2. 1%, it is still the same as the reform of 1994, which is the synchronous change and adjustment of the system and exchange rate; The exchange rate changes after the reform further reflect the policy effect of the reform. Similarly, although there has been appreciation this time, the focus is not on appreciation, but on institutional reform and the implementation of a new and more flexible exchange rate formation mechanism, which has taken a step towards marketization. Originally, it was widely expected that China would have four options after abandoning the dollar peg: free floating, narrow fluctuation, mobile pegging and basket pegging, but in the end, China had no choice. China abandoned the single pegged fixed exchange rate, but it didn't float freely, because the conditions were far from perfect. The exchange rate fluctuation and transaction fluctuation under the new system are obviously more flexible than the general narrow fluctuation. After the reform and adjustment, it is a bit like moving a nail, but the amplitude is too small and the moving frequency is difficult to determine. As for the basket of currencies, it is only a reference, not a hook. In a word, the present system is different from that one.
Because the new system has increased the marketization and flexibility of the exchange rate formation mechanism, its advantages and disadvantages may also be various. Due to the decoupling from the US dollar, it not only reduced the dependence on the US economy and the impact of the US economic fluctuations on me, but also increased the space for using RMB as an international transaction clearing tool, and took the first step towards the regional and international currency. Due to the increased flexibility of the exchange rate, it also increases the space for the central bank to adjust and choose and the possibility of manipulation. This may be unexpected to some people. We should know that this exchange rate adjustment was first challenged by the Japanese, and the biggest pressure naturally came from the United States in the ruling and opposition parties, forming a consensus among Japan, the United States and Europe. The main reason is that the China government manipulated the RMB exchange rate. But the result of the reform is not what Americans want, and even goes against their wishes. Every market subject will face greater information asymmetry and opaque operation. As far as a basket of currencies is concerned, there are not only currency issues, but also weight issues. Although the central bank has generally disclosed the currency composition, the weight is still confidential, and it is only for reference and adjustment, and it is not directly linked. At the same time, it must be adjusted according to changes in market supply and demand. Therefore, it is flexible and controllable, that is to say, the new system leaves a lot of room for the central bank to manipulate the exchange rate. Because of decoupling from the US dollar and adjusting with reference to the currency basket, the stability of the fixed exchange rate is lost, which increases the influencing factors of exchange rate formation and the uncertainty of exchange rate changes, which not only increases the difficulty of exchange rate policy operation, but also increases the complexity of supporting other policies.
Although the exchange rate appreciation is not large, the effect is tight. It is necessary to deal with this situation when China's economic operation begins to slow down. In the case that monetary policy, especially interest rate policy, is difficult to adjust, fiscal policy is needed. The most important thing is to speed up the transformation of value-added tax and income tax merger, appropriately reduce taxes to offset the tightening effect of exchange rate appreciation, reduce the decline of economic prosperity, delay the downward process of economic cycle and prevent deflation.
After reforming the exchange rate formation mechanism, the central bank introduced some supporting reform measures and issued two notices to promote the development of the foreign exchange market. On the one hand, it expands the participants in the foreign exchange market, on the other hand, it opens up foreign exchange forward trading. Its purpose is to provide new hedging tools for commercial banks, enhance the risk awareness of commercial banks and other enterprises in foreign exchange management, and provide opportunities for further internationalization. According to the data of foreign exchange trading center, there are 19 banks that have entered the foreign exchange forward trading market, including 7 Chinese banks and 2 foreign banks 12. However, since August 15, the foreign exchange trading center officially launched the inter-bank forward foreign exchange trading varieties, there has not been a violent trading situation in the market. Because the market quotation is in the same direction as expected, but in the opposite direction, the buying price of all quotations is far greater than the selling price, and the whole market is in a state of being valuable but not marketable. The transaction volume is very small, and there are only a few cumulative transactions; The transaction amount is relatively small, up to $5 million; The transaction cycle is short, and the shortest is only 8 days. This situation is normal. Can't explain what's wrong with the decision to open the market, can only show that the formation, development and maturity of any market is a gradual process, especially in the case of large speculative factors and increased market risks, the trading subject will naturally take a wait-and-see attitude out of consideration of risk prevention and lack of trading technology and trading experience. In this case, we can only persist, not waver, move forward and not retreat. As long as the market is open to the outside world, as long as the market players are continuously expanded, the trading varieties are increased and the trading system is improved, new hedging and profit opportunities will appear, trading will be active and the market will mature.
It is understandable that the exchange rate appreciation is very small this time. Because the exchange rate issue has never been a simple economic issue, but a complex political issue, not only an international political issue, but also a domestic political issue. International politics mainly involves Sino-US relations, which has already been said. People have also noticed that due to the small appreciation, it can not meet the requirements of the American ruling and opposition parties. Recently, the US Congress put pressure on China to raise the RMB exchange rate issue again, followed by the American Manufacturers Association, and the controversy in this area will recur. But domestic political issues were not mentioned. Because China's economy is quite open, the exchange rate system and exchange rate policy have a great influence, and it lacks knowledge and experience in this field, it is inevitable that there will be a bottomless heart. If it is not handled properly, it may have a major adverse impact on the current economic situation, or even a reversal, which is unbearable for the highest decision-making authorities. 2% appreciation has little practical effect, which can not only temporarily explain the internal and external pressures, but also be within the controllable range and politically acceptable. The key here is not the scope of change, but the change itself. It is better to move than not to move, and it is better to change than not to change. As long as it moves, it is not difficult to move again. This trick works well. If you move again, you will have confidence.
Because the appreciation of the exchange rate is very small, the appreciation pressure has not been eliminated. This is reflected in many aspects. First, foreign exchange reserves have increased, while hot money inflows have not decreased. Although the central bank issued less money, the money growth rate increased rapidly, and the M2 increased by 17.3% at the end of August. Second, the exchange rate trend since the implementation of the new system can also be seen. Since July 2 1 reset the trading price of the next day to 8. 1 1 yuan, the exchange rate of RMB against the US dollar rose unilaterally, rising all the way in August, falling slightly on the 30th and 30th, rising again on September 1 day, and the closing price reached the highest level on September15th. This makes the issue of RMB appreciation once again become the focus of attention of the industry and public opinion, so there are rumors that RMB will appreciate again 1%. As Xie Guozhong, chief economist of Morgan Stanley Asia Pacific, said, "If the financial market regards the last RMB exchange rate change as the beginning of a series of similar actions, it will lead to a new round of large-scale hot money inflow and speculation". Faced with this situation, central bank officials have repeatedly said that "whether the RMB exchange rate will appreciate further in the future will be determined by market supply and demand, not by the government" and that "the central bank will not adjust the exchange rate again, nor will it announce how much the RMB will rise or fall one day". However, many people disagree, and some even compare it with the position of central bank officials before the reform, thinking that this is still a trick of "there is no silver here." In fact, two things are clear. First, this exchange rate reform and adjustment has finally taken a gratifying step. It's only been two months now, and the effect has not yet fully appeared. The central bank needs to further observe and evaluate the effect and influence of this reform and appreciation and the operation of the new system. It is impossible to do the same operation in a short time. Therefore, it is unreasonable to expect further appreciation in the near future, which is an obvious speculation. Second, the RMB will appreciate, but how and when it will appreciate is another question. Due to the implementation of the "managed floating exchange rate system based on market supply and demand and adjusted with reference to a basket of currencies", there are many options for the future exchange rate policy operation, which can be appreciated again, the floating range can be expanded, and other market operation methods can be used. Under the conditions, it is better to let the market play its role step by step than administrative regulation. Correspondingly, the position of central bank officials is not empty talk. Even if the central bank chooses to appreciate again, it will not be this year, but next year or longer.
In the theory of eliminating exchange rate expectation, appreciation of 2% will not eliminate the expectation of appreciation, but will stimulate capital inflow and enhance the expectation of appreciation, coupled with further pressure from the United States. Therefore, some people think that China will follow in the footsteps of Japan, and there will be a process of continuous exchange rate appreciation, repeating the China version of the "Plaza Accord". We should neither attach too much importance to this nor take it lightly. First of all, the Plaza Accord did have a great impact on the Japanese economy, but it is exaggerated to blame the ten-year recession of the Japanese economy on the appreciation of the exchange rate. The serious economic recession in Japan is the result of the comprehensive action of many factors, which has a lot to do with Japan's economic system, especially its financial system. For example, the mutual shareholding among enterprises, the host bank system and the so-called "iron triangle" relationship among banks, enterprises and politicians are all important reasons for Japan's bubble economy. Secondly, there are similarities and differences between China and Japan during the Plaza Agreement. China is also experiencing rapid economic growth, and there is also a real estate bubble. Different from the huge non-performing assets in China's financial industry, there are also factors of exchange rate depreciation. In particular, China is a developing country with a vast domestic market. Coupled with capital account control, China has many countermeasures. As far as the capital flow is concerned, after the Plaza Accord, Japanese companies made a large number of foreign investments and even threatened to buy the whole United States, while China's current foreign investment has just started, although China also encouraged enterprises to go abroad. Third, with the lessons of Plaza Accord, China will remain vigilant and will not give up the initiative of exchange rate control easily. However, we should be very careful. There is great uncertainty in the development of the situation, and no one can completely rule out this possibility.
Judging from the decision-making and operation of this exchange rate reform and adjustment, the original principles of initiative, controllability, suddenness and gradualism have been realized, which is relatively successful. First of all, this reform and adjustment has been studied for a long time and fully prepared. Despite external pressure and internal speculation, the relevant authorities are unmoved and have stepped up their research on the exchange rate issue. At the same time, through various channels, we have widely listened to the opinions of experts. Secondly, this reform and adjustment operation has not only the first step, but also the follow-up measures of the second step, including two notices issued later on the development of the foreign exchange market. Therefore, the main problem now is not further appreciation, but how to further develop and improve the spot and forward foreign exchange market, such as speeding up the reform of interest rate marketization, forming the benchmark interest rate and pricing benchmark for market transactions, promoting the institutional reform of foreign exchange trading centers, clarifying their market positioning, and turning them into RMB futures exchanges. Only when the foreign exchange market is developed and trading is active can we find the price and know what the equilibrium exchange rate is. At this time, no matter how to adjust, there will be a more reliable basis.
Although exchange rate system and exchange rate policy are important, they are the problems of the whole economic system and policy after all. At present, the most prominent problem in China's economic operation is the two-way circulation and two-way dependence of real economy and monetary economy caused by internal and external economic imbalances. In the real economy, on the one hand, energy and raw materials are imported from the international market in large quantities, and the production cycle is completed through domestic processing and manufacturing, and the dependence on oil reaches 40%. On the other hand, a large number of products are exported, achieving a "thrilling jump" in the international market, completing the cycle from commodities to currencies, and the dependence on trade has reached 70%. On the monetary economy level, on the one hand, a large number of exports, foreign capital and hot money inflows have increased the central bank's foreign exchange holdings and money supply, and then the central bank hedged and returned the excess money in circulation through open market operations and the issuance of bills, forming domestic currency circulation and currency circulation. On the other hand, the increased foreign exchange reserves are deposited in foreign banks or purchased US Treasury bonds, and foreign governments and enterprises reinvest in China, forming a foreign currency cycle. Now it seems that the present situation of China may have reached such a turning point, and it is time to adjust its strategy, shift from mercantilism to expanding domestic demand, and implement the real policy of enriching the people. Therefore, we should not only consider and arrange the exchange rate system and exchange rate policy as a whole, but also conduct in-depth research and careful deployment on a series of long-term and important strategic issues in the whole economic development. Only in this way can we ensure the healthy development of China's economy and the harmony and stability of China's society.
Fangcheng Garden, Fangzhuang, Beijing 2005-09- 16
065438+20061October 20th "New Youth Weighing" magazine