Will the Renminbi Emerge as an International Reserve Currency?

The global reserve system can be strengthened by increasing the role of alternative currencies. A gradual evolution to a multicurrency system reduces pressure on a single reserve currency issuer from an ever‐growing balance‐of‐payments deficit. It also allows countries to better diversify their foreign exchange holdings. Given the continuing strong economic growth in the China and its growing influence on the world economy, the renminbi will likely emerge as a new international currency. However, this is contingent on the China accepting a more convertible capital account and developing an efficient financial system. Internationalising the renminbi will likely be a gradual and drawn‐out process. Simulations show that, with greater convertibility, the renminbi could gradually become an international currency within Asia and beyond – sharing from 3 to 12 per cent of international reserves by 2035.     

Risky business: Financial‐sector liberalization and China

China's dramatic growth in exports, its rising conflict with its trade partners over the perceived undervaluation of the renminbi, and the snail's pace of financial liberalization is pushing its bilateral trade and monetary relations to a boil. Discontent in the United States, Japan, Southeast Asia, and, most recently, Brazil, has led popular pundits and even country finance ministers to speak publicly of a “currency war” with many calling for the de‐pegging of the renminbi to the dollar and an immediate appreciation of China's currency. However, China's history of liberalization, beginning with the opening to the West in 1978, is well known as one of gradualism in trade and the financial spheres. Economic history is replete with economic crises brought on by too rapid or premature liberalization of countries' capital flows. This article presents the case both for and against capital account liberalization and highlights the risks that China in particular confronts in responding to external demands for greater openness and an appreciation of the renminbi. It clearly captures the tightrope that China must walk between responding to the demands of its trade partners and maintaining economic growth and political stability at home. © 2011 Wiley Periodicals, Inc.     

The Chinese RMB: Its Value,Its Peg,and Its Future

The valuation of the Chinese renminbi (RMB) has drawn lots of attention lately and a great deal of pressure on the part of developed nations for revaluation. In addressing the issue of valuation, this paper develops a new purchasing power parity (PPP) index of China’s exchange rate and finds that the while undervalued, the undervaluation is neither unusual nor bad policy. Moreover, China’s overall external trade balance does not seem to be that far out of equilibrium. China’s desire to join the G-7 club is likely to result in abandoning its peg, however, despite the increased risk to its economic development.JEL Classification F310     

The Undisclosed Renminbi Basket: Are the Markets Telling Us Something about Where the Renminbi–US Dollar Exchange Rate is Going?

On 21 July 2005 China adopted an undisclosed basket exchange rate regime. We formally assess and envisage the gradual evolution of the renminbi over time. We utilise nonlinear dependencies in the renminbi exchange rate and describe the smooth transition of the renminbi/US dollar (RMB/USD) exchange rate using the family of time‐varying autoregressive (TV‐AR) models. The results indicate that the forward‐looking nonlinear model adequately depicts the gradual reform process underlying the new RMB exchange rate regime.     

浅析人民币升值对中国经济的影响

近年来人民币汇率受到国内外的高度关注,自从中国实行一揽子货币政策以来,人民币对美元汇率一路飙升,并且迫于美国的压力,央行表示仍要持续稳定的上升。人民币的升值对我国经济带来一系列积极和消极的影响。我国政府应通过经济、行政、法律手段将人民币升值速度控制在一个合理的范围内。     

人民币汇率与中美贸易失衡的关联性实证分析

近年来,中关贸易规模发展迅速,但双边贸易不平衡问题日益突出,成为中美贸易摩擦的焦点所在,人民币汇率问题被认为是导致中关贸易不平衡的主要原因。然而通过大量数据分析和探讨中关贸易不平衡与人民币汇率的关系,发现人民币汇率并非导致中美贸易不平衡的主要原因,而美国国内经济失衡,对华出口管制,两国统计口径的差异,美国对华的直接投资才是中关贸易失衡的主要原因。     

China's exports,export tax rebates and exchange rate policy

This paper examines the relationship between China's exports, export tax rebates and exchange rate policy. It offers an explanation for why China's exports continued to rise under RMB real appreciations during the Asian financial crisis. Based on a traditional export demand model, we test our hypothesis that the counteracting effects of China's export tax rebate policy have diminished the effectiveness of real exchange rates in facilitating the resolution of trade imbalances under the current pegged exchange rate regime. We find evidence that RMB real appreciations during the crisis negatively affected China's exports, but the negative effects were mitigated by the positive effects of export tax rebates. We also find evidence of a long‐run relationship between China's exports and the other explanatory variables. The empirical evidence suggests that under the pegged exchange rate regime with limited adjustments, real exchange rate movements alone cannot resolve China's external imbalances. The policy implication of this study is that China needs to redirect its decades‐long export‐oriented development strategy to one that emphasises domestic demand‐oriented development and to replace the current pegged exchange rate regime with a market‐oriented more flexible exchange rate regime.     

人民币汇率变动对福建出口贸易结构的影响分析

文章采用1985-2010年人民币实际有效汇率和福建省FDI及出口贸易结构的年度数据进行协整分析,结果表明,福建省出口贸易结构与人民币实际有效汇率之间存在长期的稳定的均衡关系,人民币汇率稳步升值将有利于我国贸易结构的优化升级。     

Leistungsbilanzungleichgewichte im Euroraum

The internal imbalances in the euro area are often cited as one of the main reasons for the crisis there. The surpluses, especially those of Germany, correspond to the deficits in the euro area problem countries — Greece, Italy, Ireland, Spain and Portugal. An analysis of the trade and services balances of the problem countries, however, shows that this was only true up to 2004. Since 2005 their deficits with the rest of the world have been bigger, especially with China. Now the imbalances with China, not Germany, are the main concern for euro area problem countries. The reasons for this development were the strong appreciation of the euro and the structure of the economies of the euro area problem countries, which brought them into direct competition with China. Revaluation of other currencies, especially the renminbi, would enable the euro area crisis countries to pursue growth-friendly fiscal consolidation in which stronger external demand replaces internal demand. This was how Germany consolidated its budget — lower fiscal deficits were compensated by external demand contributions. The problem countries could simultaneously shrink both their fiscal and external deficits. Internal devaluation through wage moderation, however, dampens domestic demand and is recessionary in the short term.     

Number One Country,Number One Currency?1

This paper assesses the prospects for renminbi internationalisation, arguing that the process will encounter significant challenges. Some of these are familiar: the Chinese economy, while large, remains poor; China’s financial markets lack depth and liquidity; encouraging international use of the renminbi will require substantial capital account liberalisation, in the course of which things can go wrong. In addition, I highlight a less familiar challenge: China’s political system may be an obstacle to renminbi internationalisation. Since the early nineteenth century, the leading international currency or currencies have been those of countries with democratic political systems where there are constraints on the executive, which have built durable alliances, and where creditors are well represented. This is not a prediction that China must have a Democratic Spring before the renminbi becomes a leading international and reserve currency. But it does suggest that the country will have to contemplate significant political reform.     

供给因素、结构变化、汇率与我国的双边贸易

基于考虑供给因素、结构变化的出口决定模型,采用两方程方法和单方程方法研究了外国GDP、中国GDP、结构变化、汇率与我国17个双边贸易之间的关系。研究表明:供给因素、结构变化对我国双边贸易有重要影响,供给因素对我国与美、澳、马、巴、新、泰、加进口及出口的影响存在严重的不对称性,结构变化对我国与德、印、加进口及出口的影响存在严重的不对称性,汇率对中国对15个贸易伙伴国出口与进口的影响存在严重的不对称性。采用出口除进口表示贸易收支做法的单方程方法的研究存在严重错误。经济增长模式对双边贸易有重要影响,人民币升值对我国双边贸易不平衡有一定的矫正作用,对改善我国双边贸易不平衡的国别分布有较大的积极作用。     

Those Current Account Imbalances: A Sceptical View1

The international current account imbalances, where the United States has a vast deficit, and several countries, notably Japan, China, Germany and the oil exporters have corresponding surpluses, are usually seen as problems. The argument here is that current account imbalances simply indicate intertemporal trade – the exchange of goods and services for claims. There are likely to be gains from trade of that kind as from ordinary trade. What, then, are the problems? This paper considers five scenarios, notably one where net savings of the surplus countries decline so that the world real interest rate rises, and another where the US fiscal deficit is reduced, so that the world real interest rate falls and there could be a worldwide aggregate demand problem, essentially caused by the high net savings of the surplus countries. The paper reviews the reasons for the large surpluses in terms of savings and investment ratios (especially China) and also discusses the long‐term problem for the United States. While four of the scenarios involve a decline in the dollar, they do not necessarily imply a sudden – and even ‘disruptive’– dollar crisis.     

The Gravity of China's African Export Promise

Africa's largest trade partner, China, criticised for exchanging resources for manufactures, has promised to increase imports and optimise the structure of trade with Africa. Using a gravity model of China's imports for the years 1995–2009, we explore potential dynamics for this promise, uniquely accounting for market economy recognition and Taiwan recognition. The former is associated with increased imports, while the latter effect is ambiguous and statistically insignificant. Comparison of projected against actual imports across three growth‐path‐aligned economic geography typologies – resource‐rich; landlocked and resource‐poor; coastal and resource‐poor – sets out China's imports trends in an abstract framework of African export potential. We find not only ‘under’ importing across a majority of resource‐poor countries. We also find that current trade policy is the least applicable to these comparatively poor exporters’ trade with China. If the latter are to serve a broader catalytic role in Africa's regional industrial transformation as compared to the role of coastal and resource‐poor countries in regional economic transformation in Asia and Latin America, China–Africa trade and investment policies may need additional thinking.     

Currency Undervaluation and Sovereign Wealth Funds: A New Role for the World Trade Organization

Two aspects of global imbalances – undervalued exchange rates and sovereign wealth funds – require a multilateral response. For reasons of inadequate leverage and eroding legitimacy, the International Monetary Fund has not been effective in dealing with undervalued exchange rates. This paper proposes new rules in the World Trade Organization to discipline cases of significant undervaluation that are clearly attributable to government action. The rationale for WTO involvement is that there are large trade consequences of undervalued exchange rates, which act as both import tariffs and export subsidies, and that the WTO's enforcement mechanism is credible and effective. The World Trade Organization would not be involved in exchange rate management, and would not displace the International Monetary Fund. Rather, the authors suggest ways to harness the comparative advantage of the two institutions, with the International Monetary Fund providing the essential technical expertise in the World Trade Organization's enforcement process. There is a bargain to be struck between countries with sovereign wealth funds, which want secure and liberal access for their capital, and capital‐importing countries, which have concerns about the objectives and operations of sovereign wealth funds. The World Trade Organization is the natural place to strike this bargain. Its General Agreement on Trade in Services already covers investments by sovereign wealth funds, and other agreements offer a precedent for designing disciplines for these funds. Placing exchange rates and sovereign wealth funds on the trade negotiating agenda may help revive the Doha Round by rekindling the interest of a wide variety of groups.     

中国存在B-S难题吗?

目前中国依赖投资和出口驱动的经济发展模式已经引发诸多弊端和不良效应,在开放条件下,汇率变动对消费影响越来越大,居民消费变动的传递也会影响实际汇率,对中国的经验证据发现,实际汇率升值会抑制当前消费,随着消费增长率的增加,汇率被低估的概率减少,验证了B-S难题(消费—实际汇率悖论)在中国成立。     

展望未来20年中国经济发展格局

全球经济陷入疲软"新常态",中国经济"风景这边独好"。即使外部环境不好,内部反周期刺激的空间很大,中国经济仍然可以维持较高的增长。扩大内需仍应以投资为主,解决消费比重过低的办法在于改善一次分配,而不能过度强调二次分配。中国将会成为全球最大的经济体和贸易体,人民币终有一天要变成国际储备货币。但目前加速人民币国际化会扰乱中国金融秩序,不利于中国经济增长。当前中国经济政策的主要目标仍然必须是创造有利环境,保持内部相对稳定,再维持20年或更长时间的快速增长。     

Investigating China's Disaggregated Processed Exports: Evidence that Both the RMB and Exchange Rates in Supply Chain Countries Matter

China's trade surplus is entirely in processing trade. Processed exports are final goods produced using parts and components coming from supply chain countries. Many claim that because much of the value added of China's processed exports comes from other countries, the renminbi should not affect China's processed exports. To investigate these issues, this paper disaggregates processed exports into their two main categories, processing with imported materials (PWIM) exports and processing and assembly (PAA) exports. For PWIM exports, much of the value added comes from China while for PAA exports most of the value added comes from supply chain countries. DOLS results indicate that exchange rates in supply chain countries affect both types of exports and that the renminbi significantly affects PWIM exports, but not PAA exports. These results indicate that both the renminbi and exchange rates in supply chain countries matter for processed exports.     

失衡中的人民币汇率改革

定性地分析了人民币升值面临的潜在恶性循环,并指出导致该恶性循环的根源在于国际、国内经济的失衡。如果不从根本上纠正这些失衡,人民币汇率升值的正效应将被抵消,中国经济将面临流动性过剩和通货紧缩的两难选择,甚至有可能重蹈日本覆辙。     

Which foreign states support the global use of the Chinese renminbi? The international political economy of currency internationalisation

The internationalisation of the Chinese renminbi has taken a path distinct from most cases involving previous international currencies, in that policy measures adopted by governments have played crucial roles in it. This paper conducts a cross‐country analysis of the factors that have led foreign governments to introduce three primary policy infrastructures to support renminbi use—renminbi swap lines, Renminbi Qualified Foreign Institutional Investor quotas and renminbi clearing banks. Our analysis shows that a state holding renminbi assets among its reserves or having more developed financial markets is likely to establish a higher level of policy infrastructure supporting renminbi use. We also find that a country's economic and political relations with China may have meaningful impacts on the level of its establishment of those renminbi‐related policy infrastructures. These findings significantly expand our understanding of renminbi internationalisation, by identifying which non‐Chinese factors have affected its progress to date. They also contribute meaningfully to the literature on currency internationalisation and international currencies in general, by calling attention to the roles of foreign states in the process of a currency's internationalisation.     

后危机时代中国在世界经济中的作用

2008年以来,美国经济放缓,欧洲债务危机严重,全球经济明显衰退。在后危机时代,美国、欧盟、中国、日本等主要经济体应进一步调节其货币政策及经济政策。当前,世界经济需要中国在连续二十多年的快速增长之后作出更大贡献,如进一步在国际货币体系中发挥更为重要的作用,进一步减少对进口的控制,增加对其他国家商品的进口。中国仍然是发展中国家,会越来越多地出现发达国家在发展过程中的一些特点。要在人民币和美元汇率之间保持稳定性,需要制定更加扩张的货币政策,进一步提高消费水平,有效拉动内需。