| Srl | Item |
| 1 |
ID:
086472
|
|
|
|
|
| Publication |
2009.
|
| Summary/Abstract |
China's financial conundrum arises from two sources. First, its large saving (trade) surplus results in a currency mismatch because it is an immature creditor that cannot lend in its own currency. Instead, foreign currency claims (largely US dollars) build up within domestic financial institutions. Second, economists, both American and Chinese, mistakenly attribute the surpluses to an undervalued RMB. To placate the USA, the result was a gradual and predictable appreciation of the RMB against the dollar of 6 percent or more per year from July 2005 to July 2008. Together with the fall in US interest rates since mid-2007, this oneway bet in the foreign exchanges markets not only attracted hot money inflows but inhibited private capital outflows from financing China's huge trade surplus. Therefore, the People's Bank of China had to intervene heavily to prevent the RMB from ratcheting upwards, and so became the country's sole international financial intermediary as official exchange reserves exploded. Because of the currency mismatch, floating the RMB is neither feasible nor desirable, and a higher RMB would not reduce China's trade surplus. Instead, monetary control and normal private-sector finance for the trade surplus require a return to a credibly fixed nominal RMB/USD rate similar to that which existed between 1995 and 2004. However, for any newly reset RMB/USD rate to be credible as a monetary anchor, foreign "China bashing" to get the RMB up must end. Then the stage would be set for fiscal expansion to both stimulate the economy and reduce its trade surplus.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2 |
ID:
084740
|
|
|
|
|
| Publication |
2008.
|
| Summary/Abstract |
Regression analysis is used to tease out the relative significance of influences on the supply and demand for the exports of China and India. On the supply side, the value-added tax in China has discouraged export supply. The elimination of the rebate on those taxes will discourage exports. Higher wages discourage exports, but the share of exports by foreign invested enterprise is a positive influence, as is a higher share of value added in output and greater experience in exporting. On the demand side, exports depend in part on aggregate income levels in importing countries. Relative wages have been more important than exchange rates in determining the demands for Chinese and Indian exports. This evidence does not support the pressures for a devaluation of the RMB. There is also evidence of the positive significance of the accustomization of purchasers to buying Chinese exports.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|