China's new round of tightening macroeconomic regulation began in 2003 and has now continued for more than two years. Through unremitting efforts, the overheated economy has been significantly suppressed, and the price level has been controlled within a moderate increase. However, the foundation of these results is not very stable.
According to data released by the National Bureau of Statistics on the 20th, China's GDP in the first quarter increased by 9.5% year-on-year, 1.5 percentage points higher than the target set in the government work report. CPI increased by 2.8% year-on-year, and growth in fixed capital investment and energy prices remained relatively fast (21 morning news). Not long ago, Secretary-General Shi Xiaomin of the China Restructuring Reform Commission pointed out in a telephone conversation with the author that China appears to be turning from imbalance to weightlessness. Coincidentally, the latest International Monetary Fund’s economic outlook report pointed out that the Chinese economy has been out of control, and the government should pay more attention to this.
In theory, to curb economic overheating, it is necessary to adopt austerity-type macro-control, and do a good job with various control methods. However, the exchange rate as a special monetary policy is usually not used as a short-term macro-control tool. The reason is that if a free-floating system is adopted, the level of the exchange rate is determined by the market, and the state generally does not intervene. For a country where the exchange rate system is pegging, once the exchange rate is determined, it is usually not easy to change. From the history of China’s reform and opening up, China’s government has successfully carried out five macroeconomic controls, and exchange rate policies have never entered the horizon of policy makers. Even the exchange rate of 1994 was united with the needs of reforms, not to suppress the overheating of the economy at that time.
However, recent domestic and foreign scholars (especially foreign scholars) have mentioned the exchange rate in a very important position when it comes to macroeconomic regulation in China. For example, the International Monetary Fund pointed out in its recent economic outlook report that the Chinese government needs to alleviate the risk of overheating of the economy, mainly controlling excessive investment, raising interest rates, and allowing the interest rate of RMB to float freely. Gedstein, a senior researcher at the U.S. Institute of International Economics, also believes that one of the main factors contributing to the overheating of China’s economy is the exchange rate issue. If the RMB exchange rate is not adjusted as soon as possible, it will be difficult for the economic overheating issue to be fundamentally governed. There are two reasons why the exchange rate has entered the macro-control perspective this time:
First of all, the current macro-control is the first time after China's accession to the WTO. The domestic and foreign markets have begun to gradually converge. As an important bridge connecting the domestic market, the impact of exchange rates on the domestic economy has gradually expanded. In recent years, due to the generally high expectations of the appreciation of the renminbi by the international community, a large number of overseas hot money flows into China. The central bank is forced to release a large amount of base currency while eating foreign exchange, thus constituting a macro-control mechanism for the current tightening type. Obvious impact. In addition, under the expected appreciation of the renminbi, overseas companies have also increased their direct investment in China in order to win the dual benefits of investment and exchange rates. One consequence of this is that in some areas where the government prohibits domestic companies from launching new projects, such as automobiles and steel, foreign-funded enterprises continue to increase their investment, and to a certain extent hedged the Chinese government's macro-control efforts. Work hard.
Second, the pegging of the RMB exchange rate generation mechanism has increasingly failed to meet the requirements of China's economic and reform development. Exchange rate reform has been put on the agenda of the Chinese government. Under such circumstances, how to ensure the development of the exchange rate reform in the direction conducive to macro-control has naturally become the focus of academic circles.
Of course, as a country in transition, China’s marketization process has not ended, various types of money markets and capital markets have not yet been fully developed, the financial supervision system and related laws and regulations are not perfect, and the strength and control of domestic financial institutions and the risk of resisting The ability is weaker. Against this background, the reform of the renminbi must be cautious and cautious. It cannot be achieved overnight, but it will be carried out gradually and in small steps. This also determines that the exchange rate will become an important factor that must be considered in macroeconomic control for a long period of time in the future.
Once the exchange rate becomes a tool of macro-control, it must consider how to match with other tools, especially the issue of how to match interest rate policies.
Not long ago, Reuters conducted a survey of 10 Chinese and foreign financial institutions. Without exception, they forecast that China will raise interest rates this year, ranging from 0.27% to 0.5%. Among them, Standard Chartered Bank and JP Morgan even believe that there will be a second interest rate increase this year. Their expectation is based on the following facts: As the price of funds, the “negative interest rate era†in which Chinese interest rates are lower than the price has so far been for almost two years. The distortion in the price of funds has led to a continuous decline in the growth of bank residents’ savings. A large amount of funds have appeared “to go bank†and have entered the extracorporeal circulation. The economic operating data for the first quarter of this year shows that China's fixed asset investment rate is still too fast. It increased again by 22.8% on the base of 43% in the same period of last year, but foreign direct investment in the same period only increased by 9.5%, which was 13.3% lower than the overall level. Percentage. State-owned and state-controlled investments are even lower than foreign direct investment. In other words, non-governmental investment that receives a large amount of funding from extracorporeal circulation has become the main driving force for the current investment overheating! Whether it is adjusting the exchange rate or adjusting interest rates, it will have an impact on the macro economy. If it is introduced at the same time, it will have a greater impact on the national economy. Therefore, in the end is the first exchange adjustment, or the first interest rate adjustment? It is a question worth considering.
If interest rates are adjusted first, the operation is relatively simple, and it can effectively curb the investment enthusiasm of private capital, but it will have a negative effect: As the interest rate increases, it will attract more inflows of hot money from abroad, affect the macro-control effect, and will give The next step is to make exchange rate adjustment more difficult.
If the exchange rate is first adjusted, it will be difficult and it may pose a certain risk. However, this is a step we will take sooner or later. If we take a good step, it will not only create a good internal environment for macro-control, but also be beneficial to To achieve balance of international payments, reduce international trade disputes, and create a favorable external environment for macroeconomic regulation and control.
According to data released by the National Bureau of Statistics on the 20th, China's GDP in the first quarter increased by 9.5% year-on-year, 1.5 percentage points higher than the target set in the government work report. CPI increased by 2.8% year-on-year, and growth in fixed capital investment and energy prices remained relatively fast (21 morning news). Not long ago, Secretary-General Shi Xiaomin of the China Restructuring Reform Commission pointed out in a telephone conversation with the author that China appears to be turning from imbalance to weightlessness. Coincidentally, the latest International Monetary Fund’s economic outlook report pointed out that the Chinese economy has been out of control, and the government should pay more attention to this.
In theory, to curb economic overheating, it is necessary to adopt austerity-type macro-control, and do a good job with various control methods. However, the exchange rate as a special monetary policy is usually not used as a short-term macro-control tool. The reason is that if a free-floating system is adopted, the level of the exchange rate is determined by the market, and the state generally does not intervene. For a country where the exchange rate system is pegging, once the exchange rate is determined, it is usually not easy to change. From the history of China’s reform and opening up, China’s government has successfully carried out five macroeconomic controls, and exchange rate policies have never entered the horizon of policy makers. Even the exchange rate of 1994 was united with the needs of reforms, not to suppress the overheating of the economy at that time.
However, recent domestic and foreign scholars (especially foreign scholars) have mentioned the exchange rate in a very important position when it comes to macroeconomic regulation in China. For example, the International Monetary Fund pointed out in its recent economic outlook report that the Chinese government needs to alleviate the risk of overheating of the economy, mainly controlling excessive investment, raising interest rates, and allowing the interest rate of RMB to float freely. Gedstein, a senior researcher at the U.S. Institute of International Economics, also believes that one of the main factors contributing to the overheating of China’s economy is the exchange rate issue. If the RMB exchange rate is not adjusted as soon as possible, it will be difficult for the economic overheating issue to be fundamentally governed. There are two reasons why the exchange rate has entered the macro-control perspective this time:
First of all, the current macro-control is the first time after China's accession to the WTO. The domestic and foreign markets have begun to gradually converge. As an important bridge connecting the domestic market, the impact of exchange rates on the domestic economy has gradually expanded. In recent years, due to the generally high expectations of the appreciation of the renminbi by the international community, a large number of overseas hot money flows into China. The central bank is forced to release a large amount of base currency while eating foreign exchange, thus constituting a macro-control mechanism for the current tightening type. Obvious impact. In addition, under the expected appreciation of the renminbi, overseas companies have also increased their direct investment in China in order to win the dual benefits of investment and exchange rates. One consequence of this is that in some areas where the government prohibits domestic companies from launching new projects, such as automobiles and steel, foreign-funded enterprises continue to increase their investment, and to a certain extent hedged the Chinese government's macro-control efforts. Work hard.
Second, the pegging of the RMB exchange rate generation mechanism has increasingly failed to meet the requirements of China's economic and reform development. Exchange rate reform has been put on the agenda of the Chinese government. Under such circumstances, how to ensure the development of the exchange rate reform in the direction conducive to macro-control has naturally become the focus of academic circles.
Of course, as a country in transition, China’s marketization process has not ended, various types of money markets and capital markets have not yet been fully developed, the financial supervision system and related laws and regulations are not perfect, and the strength and control of domestic financial institutions and the risk of resisting The ability is weaker. Against this background, the reform of the renminbi must be cautious and cautious. It cannot be achieved overnight, but it will be carried out gradually and in small steps. This also determines that the exchange rate will become an important factor that must be considered in macroeconomic control for a long period of time in the future.
Once the exchange rate becomes a tool of macro-control, it must consider how to match with other tools, especially the issue of how to match interest rate policies.
Not long ago, Reuters conducted a survey of 10 Chinese and foreign financial institutions. Without exception, they forecast that China will raise interest rates this year, ranging from 0.27% to 0.5%. Among them, Standard Chartered Bank and JP Morgan even believe that there will be a second interest rate increase this year. Their expectation is based on the following facts: As the price of funds, the “negative interest rate era†in which Chinese interest rates are lower than the price has so far been for almost two years. The distortion in the price of funds has led to a continuous decline in the growth of bank residents’ savings. A large amount of funds have appeared “to go bank†and have entered the extracorporeal circulation. The economic operating data for the first quarter of this year shows that China's fixed asset investment rate is still too fast. It increased again by 22.8% on the base of 43% in the same period of last year, but foreign direct investment in the same period only increased by 9.5%, which was 13.3% lower than the overall level. Percentage. State-owned and state-controlled investments are even lower than foreign direct investment. In other words, non-governmental investment that receives a large amount of funding from extracorporeal circulation has become the main driving force for the current investment overheating! Whether it is adjusting the exchange rate or adjusting interest rates, it will have an impact on the macro economy. If it is introduced at the same time, it will have a greater impact on the national economy. Therefore, in the end is the first exchange adjustment, or the first interest rate adjustment? It is a question worth considering.
If interest rates are adjusted first, the operation is relatively simple, and it can effectively curb the investment enthusiasm of private capital, but it will have a negative effect: As the interest rate increases, it will attract more inflows of hot money from abroad, affect the macro-control effect, and will give The next step is to make exchange rate adjustment more difficult.
If the exchange rate is first adjusted, it will be difficult and it may pose a certain risk. However, this is a step we will take sooner or later. If we take a good step, it will not only create a good internal environment for macro-control, but also be beneficial to To achieve balance of international payments, reduce international trade disputes, and create a favorable external environment for macroeconomic regulation and control.
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