سیاست نرخ ارز چین

Should or will the yuan depreciate? This is an important question widely speculated in world financial markets and intensively debated in China in the wake of the East Asian financial crisis in 1997. The present paper examines in detail the fundamentals that determine the exchange rate in China and concludes with two important findings. One is that the past two decades of economic reform has made domestic prices in China sufficiently market-determined and linked to world prices so that the exchange rate can serve as an effective nominal anchor. Exchange rate stability leads to domestic price stability. The other result is that because of the flexibility of domestic prices, a change in the exchange rate has only a modest and ephemeral effect on the terms of trade and trade flows. Therefore, exchange rate flexibility is not essential to keep the current account in balance. Such evidence suggests that China should continue the policy to maintain exchange rate stability, as it has done since 1994.

Will or should the yuan depreciate? This is a question widely speculated in world financial markets and intensively debated in China. There has been keen interest in the exchange rate policy in China in the wake of the Asian financial crisis in 1997. The yuan–dollar exchange rate has been stabilized at 8.30 since 1994. Has that been a sensible exchange rate policy? Should China make the exchange rate more flexible and possibly let the yuan to depreciate to counter the aftermath of the Asia financial crisis? In the debate about the need for the yuan to depreciate, most of the attention has been focused on the fact that export growth has been slowing down in China. Therefore, a depreciation of the yuan is needed to make Chinese exports more competitive. The present paper argues that now in China, the exchange rate is actually more useful as a nominal anchor than as an expenditure-switching tool. Exchange rate stability provides a firm anchor for domestic price stability that is conducive to sustained long-run economic growth. As the Chinese economy becomes more integrated with world markets and domestic prices more firmly linked with world prices, trade flows have become less responsive to the variation in the exchange rate. Therefore, it is a sensible policy to maintain exchange rate stability as long as short-term speculative capital flows remain restricted. The paper is organized as follows. Section 2 reviews the post-1978 developments in the foreign exchange market. Then, I analyze how the exchange rate was related to the domestic price level in Section 3 and investigate how the exchange rate affected the flows in the balance of payments in Section 4. Finally, Section 5 presents the case for targeting the exchange rate as a nominal anchor, especially in the light of the Asian financial crisis.

In conclusion, exchange rate stability can be a sensible policy for China at present, because the exchange rate is more useful as a nominal anchor than an expenditure-switching tool to influence the balance of payments. This property reflects a fundamental fact that the after two decades of economic reform, Chinese economy has already become sufficiently marketized and open to foreign trade and investment. In addition to the arguments presented above, two other relevant considerations have also been cited against a possible depreciation of the yuan. One is that a depreciation of the yuan may trigger further competitive devaluations in other East Asian economies, thus, aggravating the economic and financial crises there. The other is that a depreciation of the yuan may also enlarge China's existing trade imbalances with her major trading partners, especially the United States, thus, exacerbating trade tensions with them. Though a case has been made in the present paper for China to pursue exchange stability at present, more exchange rate flexibility will be needed in the future, as China gradually liberalize capital controls and make the yuan convertible for the capital account as well. It is well known that under perfect capital movement, a fixed exchange rate is incompatible with an independent monetary policy that is mainly focused on domestic economic objectives, especially for large economies such as China. Nevertheless, in view of the shaky banks and immature financial markets now in China, capital account liberalization should not proceed hastily.