1、外文 原文 The Chinese RMB: Its Value, Its Peg, and Its Future -TRADE IMBALANCES HAVE MORE TO DO WITH THE U.S. THAN WITH CHINA 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 is
2、sue of valuation, this paper develops a new purchasing power parity (PPP) index of Chinas exchange rate and finds that the while undervalued, the undervaluation is neither unusual nor bad policy. Moreover, Chinas overall external trade balance does not seem to be that far out of equilibrium. Chinas
3、desire to join the G-7 club is likely to result in abandoning its peg, however, despite the increased risk to its economic development. The valuation of the Chinese renminbi (RMB) has drawn lots of attention lately. The IMF, theU.S. government, and the G-7 finance ministers are urging China to reval
4、ue its currency,which is currently pegged at 8.28 to the dollar.The arguments for China to appreciate its currency roughly follow these lines: Chinas currency is grossly undervalued； the undervalued RMB is attracting a flood of hot money into China, complicating the authorities efforts to engineer a
5、 soft-landing for an overheated economy； and the RMBs undervaluation and its peg to the dollar are preventing other Asian countries from allowing currencies to rise against the dollar, since appreciation would damage competiveness relative to China. This last point is of particular concern because,
6、it is argued , U.S. external imbalances cannot be addressed in the face of Chinas and other Asian nations historically unprecedented accumulations of U.S. dollar reserves in recent years .There have been many studies on the RMBs valuation with inconclusive, contradictory results (see, e.g.,Wang, 200
7、4). To address that difficult valuation question, this paper develops a new absolute PPP index that measures Chinas PPP against the United States and other countries. The new index shows the RMB to be substantially undervalued in the context of “conventional wisdom.” However, the undervaluation is n
8、ot unusual, given Chinas level of economic development； and conventional wisdom does not apply to China, because by any measure it is an undeveloped nation for which a currency peg is useful to maintain domestic economic and political stability (Prasad et al., 2003). In terms of multilateral externa
9、l balances, we find it hard to argue that Chinas currency is contributing much to its trade and balance of payment surpluses, especially if one takes the 1997 perspective when the RMB was under tremendous depreciation pressure. Indeed, there is clear evidence that if Chinas trade balance was evenly
10、distributed among its trading partners, there would be hardly any pressure for China to appreciate its currency. Thus, the pressure is political and structural in nature, originating from the large and growing multilateral trade imbalance of the United States. Unfortunately, it is much easier to bla
11、me China than to attack the underlying structural causes of the U.S. trade deficit. We conclude that the political pressure on China to abandon the RMBs peg to the dollar is likely to persist, andas the most important growth market in the world todayChina is more likely to move sooner rather than la
12、ter to demonstrate that, in spite of the risks to its fragile financial system, it will share its global responsibilities as it eventually joins the G-7. The paper wraps up by placing the exchange issue in the broader context and discussing the longer-term prospects of the RMB. Is the RMB Undervalue
13、d? The RMB is undervalued in the conventional sense that there is too much demand for it relative to the supply .Fundamentally, demand for foreign currency comes from three sources: to buy goods or services, to invest in physical or financial assets, and to speculate on moves of the exchange rate it
14、self. With a closed capital account, Chinas currency is largely, but not entirely, immune from currency speculators and short-term portfolio investors. Recent studies at the China National Economic Research Institute (2003) indicate that much of the so-called “hot money” inflows are not a result of
15、foreign hedge fund activities. Rather, they are a change in borrowing and deposit behaviors of domestic firms and individuals, taking advantage of the loopholes in the current foreign exchange regulations. Thus, we can focus our attention on the trade and long term investment flows in China and look
16、 at the standard measures, such as purchasing power parity (PPP), trade balance, current account balance, balance of payments, and foreign reserves. PPP is an ancient economic concept, dating back at least to David Hume (1752), which has been experiencing something of a revival lately .The Economist
17、 (current) defines PPP as “the exchange rate that equates the price of a basket of identical traded goods and services in two countries.” The theory is that PPP exchange rates represent the equilibrium levels among the nations and that any departure from these levels causes potentially significant a
18、nd distorting trade imbalances. There are different measures of PPP: a strong version or “absolute” version that emphasizes the absolute equality of prices (sometimes called “the Law of One Price”) and a “relative” version that emphasizes the ongoing movement over time towards that equality. Should
19、China Bow to the Pressure? Aside from political considerations, which we will discuss later, the question of whether China should move now is a complex one, relating to several considerations. First, market expectations of the RMBs move have already caused a significant reversal of capital flight an
20、d increased upward speculative pressure. Second, cyclical global macroeconomic developments are likely to reduce upward pressure on the RMB. Third, China is in the midst of critical structural reforms, especially in the financial sector, that require focused attention. Fourth, it is increasingly cle
21、ar that the current economic overheating is sectoral in nature, which is in sharp contrast with the 1993-4 episode. These considerations suggest that it is not in Chinas interest to revalue the currency at this time . Lets take a closer look at each of these issues. Re-pegging the RMB Re-pegging the
22、 RMB at a value, say, 15-20 percent higher against the U.S. dollar would instantly vindicate the currency speculators, although they are mostly domestic players. Over the last couple of years, the net errors and omissions category in Chinas balance of payment has shown a large swing from persistent deficits to a
