Professor Song Guoqing from China Economic Research Center gave a special lecture entitled "Trade and Exchange Rate". The lecture is divided into five parts: first, the new situation of the current world economy; Second, the relationship between interest rate and exchange rate; Third, the influence of exchange rate on international trade; Fourth, the impact of international trade on the real economy; Fifth, the impact of exchange rate changes on the real economy; Finally, the impact of the real economy on interest rates.
From the end of 2005 to the beginning of 2006, some new changes have taken place in the world economy. First of all, in the fourth quarter of last year, the overall growth of the world economy was strong, especially in Japan and South Korea, which was quite unexpected for analysts and the market. China's economy has also picked up, but it is relatively weak, because China's economy itself is growing at a high speed. Since the end of last year, Japan's industrial production has recovered strongly, with a monthly growth rate of industrial output value as high as 10%. Second, world commodity prices continue to climb. Affected by typhoon and other factors, the prices of world oil and non-ferrous metals rose all the way, and the world non-ferrous metal stock market began to soar, leading the stock market to a bull market. China's domestic non-ferrous metal stock market has also been affected, which shows that China's economy and the world economy are getting closer and closer; Thirdly, the market's expectation of raising interest rates in the United States showed a U-shaped rebound. In mid-June last year, 165438+ 10, the Fed report suggested that the interest rate hike would come to an end, which weakened the market's expectations for the Fed. The market generally believed that the Fed would not continue to raise interest rates, but the rise in world commodity prices at the end of last year led to a gradual increase in market expectations for the Fed to continue to raise interest rates. In addition, South Korea raised interest rates three times in four months, reflecting that raising interest rates is the general trend of the world. The possibility of raising interest rates in Japan in the future cannot be completely ruled out, but the possibility of raising interest rates in the short term is slim. The global trend of raising interest rates has put pressure on China's interest rate policy, and how the central bank responds needs further study; Finally, China's exports soared in early 2006. In 2006 1 month, China's exports increased by 28% year-on-year, and the cancellation of temporary textile quotas was an important factor to stimulate foreign trade exports. According to the export data of 2006 1 month and the rapid growth of exports, the expected growth rate of China's economic growth in 2006 should be improved.
The second question is the relationship between exchange rate and interest rate. Interest rate parity can explain the relationship between interest rate and exchange rate. According to the exchange rate parity, if the long-term expectation of the exchange rate remains unchanged, if the interest rate of the US dollar rises and the interest rate of the Japanese yen remains unchanged, or if the expectation of the increase of the interest rate of the US dollar is higher than the interest rate of the Japanese yen, then the holders of the Japanese yen will sell the Japanese yen and buy the US dollar and US dollar assets, resulting in the spot exchange rate of the Japanese yen against the US dollar falling. A similar conclusion can be drawn from the actual economic data. For example, from 2002 to 2003, the Federal Reserve cut interest rates several times in a row, the interest rate of the Japanese yen remained unchanged, and the exchange rate of the Japanese yen against the US dollar kept rising. Since 2004, the Federal Reserve has adjusted its interest rate policy and started to raise interest rates. The interest rate of the Japanese yen has not changed, and the exchange rate of the Japanese yen against the US dollar has continued to fall. From this, we can draw a preliminary conclusion: as long as the long-term expectation of exchange rate remains unchanged, raising interest rates in the United States will lead to the depreciation of the yen.
The premise of exchange rate parity is that the long-term expectation of exchange rate remains unchanged. This assumption does not exist in the real economy. For example, South Korea cut interest rates several times from 2002 to 2004, while the Federal Reserve raised interest rates continuously during this period. According to the exchange rate parity theory, the won should depreciate against the US dollar, but in fact it is constantly appreciating against the US dollar. To explain the change of exchange rate, the key is to understand various factors that affect the change of exchange rate. From the above example, we can draw a conclusion that the change of interest rate causes the change of exchange rate. Assume that the change of interest rate is exogenous, and then study the influence of interest rate change on exchange rate change.
The third issue is the impact of exchange rate changes on international trade. Before 2005, the dollar continued to depreciate against other major currencies in the world. 2005 was a turning point. With the pace of interest rate increase by the Federal Reserve, the dollar began to appreciate. Therefore, the yen and the euro continued to depreciate against the US dollar. Judging from the nominal exchange rate and the real exchange rate, the real exchange rate of the yen has depreciated more than the nominal exchange rate, because the inflation rate in Japan is 3% to 4% lower than that in the United States. If the yen depreciates 10% against the US dollar, the yen will depreciate sharply. Inflation rates vary greatly from country to country. At present, Japan's economic situation has improved, and the inflation rate has remained at a low level, far lower than that of the United States. Japan's CPI has not dropped for six months, and it is a good thing that Japan's economy does not drop. From the end of 2004 to 2005, the yen kept depreciating, with the depreciation rate exceeding 15%, which is the basic situation of Japan's economic changes. The depreciation of the yen has a certain impact on Japan's exports, but three different results can be obtained by measuring Japan's exports with dollars, yen and constant prices: measured with yen, Japan's exports have increased greatly; At constant prices, Japan's exports have not increased much.
Regarding the relationship between RMB exchange rate and China's foreign trade, since RMB exchange rate is pegged to the US dollar, the trend of RMB is basically the same as that of the US dollar, and it has been depreciating from 2002 to 2004. The inflation rate in China is between the United States and Japan, lower than that in the United States and higher than that in Japan. The difference between the nominal exchange rate and the real exchange rate is basically offset after averaging. After three years of depreciation, the RMB appreciated with the appreciation of the US dollar in 2005. The change of RMB exchange rate is closely related to exports. From 2000 to 2005, we can get the trend chart of China's exports, and after smoothing the data, we can get the percentage of China's short-term export trend deviating from the long-term trend. The percentage of this deviation is obviously related to the RMB exchange rate. From 2000 to 2002, with the appreciation of RMB, the short-term export trend weakened. From 2003 to 2005, the RMB depreciated and the short-term export trend increased. From the above historical data, we can find that the change of RMB exchange rate has a profound impact on China's exports. 200 1 year is the worst year for China1year. The appreciation of RMB leads to insufficient external demand, and the domestic demand market cannot be opened in time, resulting in weak economic growth. From the fourth quarter of 20001,the RMB began to depreciate with the US dollar, China's exports began to increase substantially, and its economy grew rapidly. Professor Song Guoqing once predicted that China's economy would grow rapidly in 20001year, when China's economy was in the lowest ebb, in 2002 and 2003. Later, the facts confirmed his prediction.
The fourth problem is that changes in trade cause changes in the real economy. If calculated by purchasing power parity, China's total industrial output value is more than 3 trillion US dollars, the United States is more than 2 trillion US dollars, and China is bigger than the United States, ranking first in the world. However, there are some problems in the purchasing power parity method itself, which may overestimate the output value of the service industry. We should design a new method to measure the share of industry in the world economy and study the influence of China's economy on the world. For example, we should design a world industrial index to measure the proportion of each economy in the world industry. If we can calculate the share of China and India in the world industry, it will have a positive impact.
From 2000 to 2006, the industrial production indexes of China, the United States, Japan, Korea and Germany were analyzed, and it can be found that the industrial indexes of Japan and Germany increased less than 10% in six years. Now the eyes of the whole world are focused on Japan. In the last two months of 2005, the growth rate of Japanese industrial output value was as high as 16%, which was faster than that of China. However, due to the relatively small share of industry in Japan's economy, Japan's GDP growth rate is lower than that of industry. If the proportion of Japanese industry in GDP is the same as that of China, Japan's GDP growth rate will be higher than that of China. It is predicted that Japan's GDP growth rate may be as high as 5%-6% in 2006, and 7% is also possible. From May and June 2000 to May and June 2005, Japan's industrial output basically grew at zero, but it exploded in June 2005. South Korea's growth is also very fast, especially in June 2005, 1 1, but after all, South Korea is a small economy, and the growth rate of small economies fluctuates greatly.
The fluctuation of China's industrial index is very small, which is difficult to be explained by existing theories. For this phenomenon, the first thing that comes to mind is that the China Bureau of Statistics has a strong function, but there is no direct data to prove that the Bureau of Statistics has adjusted the data. At present, there is only one economic census, and the service industry has been adjusted, but the industry has not been greatly adjusted. If the statistical department wants to smooth out a statistical series, either the data is just smoothed out or there will be a big gap. If the statistical department adjusts the data according to the envisaged average, it is difficult to determine the correctness of the average. The bureau of statistics may "press water" on the data according to its own standards, and it will take several years to find the problem. Fortunately, industrial data has not changed much. If China's industrial index is not calculated, there is no fluctuation at all, and it is difficult to explain this phenomenon. As a big economy, the industrial index of the United States fluctuates sharply, and so do the industrial indexes of other OECD countries. It can be assumed that the impact of exchange rate changes on China and the United States is neutral, but it is positive for Japan and South Korea, especially for Japan. However, due to the lack of long-term data support, it is difficult to prove the correctness of this assumption.
The fifth issue is the impact of exchange rate changes on the real economy. For a single country, currency depreciation may lead to economic strength, while currency appreciation may lead to economic weakness; But for big economies like the United States and China, the impact of exchange rate changes on the economy is not obvious. For the global economy, if the exchange rate changes symmetrically, then the impact of exchange rate changes on the world economy is neutral, even for a single country.
For a big country like China and the United States, currency appreciation has little impact on the economy. Of course, it can also be said that the positive and negative effects just cancel each other out. If the impact of exchange rate changes on the global economy is symmetrical and equal, then the overall impact of exchange rate changes on the world economy is zero, because the positive impact on one country's economy and the negative impact on another country's economy cancel each other out. Economic appreciation and economic depreciation each account for half, and the information is completely independent, so the impact of exchange rate changes on the global economy is neutral. If the impact of exchange rate changes on the global economy is not neutral, then depreciation can promote economic growth, and appreciation will not cause economic recession. In this case, it is obviously unrealistic that all economies can benefit from exchange rate changes. The impact of exchange rate changes on the global economy is neutral, even for individual countries.
The last question is the impact of the real economy on the exchange rate. The actual production level in China and the United States has exceeded the potential production capacity. At this time, expanding the total demand will only lead to an increase in the inflation rate, and the short-term economy may be stimulated, but this is a "stimulus effect" that is not beneficial to the long-term economy. At present, no country will acquiesce in the high inflation rate in pursuit of short-term high economic growth, and the government's primary goal for the economy is to stabilize prices. For China, the United States and European countries, if the inflation rate rises, the central bank should raise interest rates to curb the expansion of aggregate demand. For the United States, if the inflation rate rises, the Fed will raise interest rates; For China, there may be strong export growth this year, and the government will curb the expansion of total demand by curbing investment. In short, aggregate demand cannot be allowed to continue to expand.
China is not short of domestic demand. The shortage of domestic demand is a man-made problem, because the domestic interest rate in China is low and the return on investment is high. As long as the government relaxes macro-control, domestic demand will expand rapidly. The key problem of Japanese economy is insufficient domestic demand, because some enterprises are not allowed to go bankrupt, resulting in the actual production level being lower than the potential production capacity. Japan has no way to expand aggregate demand. The only way is to rely on external demand. Japan's nominal interest rate is close to zero, and it is no longer possible to expand aggregate demand by cutting interest rates. If Japan can expand domestic demand, the inflation rate will not rise. The production level of China, the United States and South Korea is close to that of production possibility frontier, and the expansion of total demand will lead to the increase of inflation rate, which will eventually lead to the central bank raising interest rates. Take South Korea as an example. Last year, strong economic growth was accompanied by rising inflation rate. The Bank of Korea raised interest rates three times in four months to control the excessive expansion of domestic aggregate demand.
Question part:
Q: What impact will RMB appreciation have on employment? What is the operation method of reducing foreign exchange holdings?
A: Only when the RMB appreciates by 30% should we be vigilant. The only way to reduce foreign exchange holdings is for the central bank to sell foreign exchange directly, and the central bank can sell foreign exchange directly to enterprises; Or, the central bank directly sells foreign exchange to the Ministry of Finance; Moreover, it is unlikely that the central bank will hand over foreign exchange to state-owned enterprises. The reduction of foreign exchange holdings should be determined by the market. State-owned enterprises do not participate, and export enterprises can participate. In the process of reducing foreign exchange holdings, the RMB may appreciate, which will have some impact on export enterprises, but the RMB can appreciate slowly and gradually, for example, 5% to 6% annually within three years. However, the market cannot expect to appreciate by 5% every year, and arbitrage needs to be prevented. In addition, China's labor productivity is constantly improving, and the export volume of export enterprises is increasing by more than 30% every year. As long as the export growth of labor-intensive enterprises is maintained at 20% every year, the appreciation of RMB will not lead to a large number of unemployment.
Q: What do you think of the political pressure exerted by the United States on the RMB exchange rate issue?
A: It is difficult to judge whether the pressure exerted by the United States on China on the exchange rate issue is positive or negative. The United States keeps putting pressure on China, but it can't just consider political factors. At present, the United States, Japan and China all have the same upstream and downstream production, with a wide range of interests. Some people think that the sharp appreciation of RMB is a disaster, and some people think that it is a disaster as long as RMB appreciates, but so far, the disaster has not happened, and the impact of RMB appreciation on the economy is not as great as bird flu. Of course, some people still think that some potential disasters will happen. The United States has taken great pains to appreciate the RMB. But the United States should see that China has made great progress in exchange rate reform. The United States should not be too hasty. Although China has a huge trade surplus with the United States, China's trade surplus with the United States is shrinking this year 1 month. If this is not caused by accidental factors, China's trade surplus with the United States will continue to shrink. The United States should see the progress of China.
Q: Will the surge in trade this year 1 month affect the independence of the central bank's monetary policy?
A: Some special circumstances led to the growth of trade in 1 month this year, such as export quotas. Analysis of exports depends on three months' data. If the number of three months increases significantly, it needs to be suppressed. We can curb domestic demand by raising interest rates, and we can also curb external demand by raising exchange rates. If interest rates and exchange rates do not move, the central bank will have to hold more meetings and reduce loans from commercial banks, but in the end, the National Development and Reform Commission will have to find a way. Adjusting the exchange rate and interest rate is the best way, and it is easier to curb external demand than domestic demand.
Q: How forward-looking and applicable is the M2 indicator?
A: I have been emphasizing the role of M2 indicators. I participated in the writing of an article entitled "China M2 Indicators Lead World Economic Prosperity" to express my concern about M2. Last year's economic forecast emphasized the monetary transmission mechanism, and the forecast of inflation rate was generally 3% to 4%, but the forecasts of several students in the Economic Center were all below 2%. Last year's actual inflation rate was 1.8%, and the most important indicator for studying inflation rate is M2. For the conduction mechanism of M2, I made three models in narrative way. One is the positive transmission mode, such as the price increase of oil and steel will be transmitted to the downstream; The second is the negative transmission mechanism. Rising upstream prices will lead to falling downstream prices, and modern macroeconomic models will choose the second model. The third mode is that the monetary authorities control the economy, use monetary policy to guide prices, and use interest rate leverage to maintain price stability. Financial assets in Japan and the United States account for a large proportion in the economy, while time deposits account for a small proportion. China's M2 is more convincing. We should pay attention to M2 in the short term, and last year's investment should pay attention to M2.
Q: The Bank of Japan wants to increase M2, but why is it difficult to increase the money supply? Is the increase of China's foreign exchange reserves mainly caused by the current account or the hot money of FDI in 2005? What is the impact of real estate regulation on domestic demand?
A: It is difficult to increase the money supply in Japan, mainly because commercial banks are unwilling to lend to enterprises, which is the root cause of deflation in Japan. The central bank can reduce the rediscount rate and encourage commercial banks to lend to enterprises, but Japan adopts the zero interest rate policy, and commercial banks are still reluctant to lend to enterprises. In terms of interest rate policy, the Bank of Japan has no other way. Because of institutional reasons, some large Japanese enterprises are not allowed to go bankrupt despite their heavy debts. Considering the risks, banks are afraid to lend to these enterprises. If they go bankrupt, the bank will dare to lend them money.
The reasons for the increase in foreign exchange reserves can be understood through the balance of payments. Only the money in the securities market should be called hot money. The so-called hot money here is only transfer payment, and the amount of transfer payment is not large, which has no explanation for the increase of more than 200 billion foreign exchange reserves. Some investments are regarded as hot money. Under the condition of open and transparent capital account, foreign capital can be used for investment in many ways, but investment in China still needs approval.
In the first half of 2005, China's economy showed a trend of deflation, and the real estate control policy made the economy worse. In order to prevent deflation, the government relaxed macro-control and did not suppress the economy. Even if deflation occurs, it can be adjusted in a few months.
Q: Has Japan's economy been out of the haze for ten years in a row? How does the revival of Japanese economy affect China's economy?
A: In 2003, I wrote an article about China coming out of deflation. In this article, I made a detailed study of China's economy, including bad debts and money supply in China. I don't have such a detailed study of the Japanese economy, but through some articles and data about the Japanese economy, we can know that the market is generally optimistic about the Japanese economy, and the revival of the Japanese economy will have a positive long-term impact on China's economy.