人民币升值： 经验与教训

ADBI RESEARCH POLICY BRIEF No. 18 PRC Toshiki Kanamori and Zhijun Zhao Renminbi Revaluation: Lessons and Experiences The views expressed in this paper are the views of the author and do not necessarily reflect the view or policies of the Asian Development Bank Institute. 1 Contents Executive Summary 1 Introduction 8 1. Developments in Early 1970s 8 2. Developments in Mid–late 1980s 10 3. Capital Flow and Regulations on Capital Account Transactions During These Periods 11 4. Policy Responses of Japanese Authority 12 4.1 Early 1970s 12 4.2 Mid–late 1980s 13 5. Lessons to be Learned 14 5.1 Similarities and Differences Between the PRC and Japan 14 5.2 Impact on Macro Economy 17 5.3 Independent Monetary Policy and Regulations on Capital Flow 18 5.4 External Imbalance and Exchange Rate Adjustment 20 5.5 Impact on Different Interest Groups 21 5.6 Long-term Impact of Currency Appreciation 22 Select References 23 End Notes 23 Executive Summary Japan experienced sharp appreciations of the yen twice after World War II, the first followed by hyperinflation and the second by the “economic bubble” in the late 1980s. The country then underwent a long recession, the so-called “lost decade.” Some Chinese economists are worried that if the renminbi were sharply appreciated for a very short period of time, the PRC might follow the same path of recession that Japan experienced. To avoid such a path, can the PRC learn any possible lessons from Japan’s experiences? 2 1. Similarities and Differences Between the PRC and Japan Japan’s economic situation during the early 1970s and the mid–late 1980s somewhat resembles the PRC’s recent economic situation. The US also suffered the collapse of a new economy bubble from 2001 until recently. This aggravated the so-called twin trade and fiscal deficits in the US economy and put a downward pressure on the value of the dollar. Domestically, since the PRC joined the WTO in December 2001 and started to gradually liberalize its capital account transactions, the country has registered an increasing trade surplus and accumulated a large amount of foreign reserves, though some efforts have been made to ease the appreciation pressure on the renminbi. Three aspects of the situations faced by Japan differ importantly from that faced now by the PRC, making for more intense pressure for renminbi appreciation than that historically put on the yen. First, because the economies of the world are now more closely interlinked through trade, more FDI and international money flow now than when Japan faced the yen appreciations. Second, most major countries have now, in principle, completed liberalization on current and capital account transactions under a floating exchange regime and removed various external barriers. Third, unlike Japan during these periods, the PRC’s capital account balance continues to register a large surplus. The PRC currently faces two serious factors that did not exist in Japan. These may explain why the government is very careful about or strongly resists renminbi appreciation. One factor is the serious unemployment problem in rural areas and the mounting pressure to create employment opportunities in urban areas. The other relates to solving non-performing loans (NPL) in state-owned banks. The PRC government and four asset management companies have been trying to involve foreign investors in the liquidation and disposal of NPLs. A sharp appreciation of the renminbi would definitely discourage them from participating in the NPL disposal. 3 2. Impact on Macro Economy Loose monetary policy was one of the underlying factors of the serious inflation Japan faced both after the early 1970s and in the mid–late 1980s. Also, policy change was not implemented in a timely fashion in either period. However, the impact of the currency appreciation on the economy tended to be overemphasized. Thanks to the appreciation of the yen, prices of raw materials declined and terms of trade were improved significantly, even benefiting Japanese industries. The international competitiveness of Japanese commodities was also unexpectedly high in terms of quality management. These unexpected benefits indicate the importance and difficulty of assessing the behavioral change and international competitiveness of enterprises and predicting the overall impact of currency fluctuation on the macro economy. The PRC’s currency was undervalued by an average of 17 percent in past years. Thus, the 2.1 percent revaluation of the currency announced in July 2005 is not sufficient to weaken the competitive power of the PRC economy and reduce the trade surplus against the US. The balance of trade may even continue expanding short term. The revaluation also has a limited impact on overall inflation. Considering the chain effects and accumulated effects of renminbi revaluation, the PRC economy could endure more extensive revaluations from the macro economic point of view. However, the PRC’s main problems are not in the aggregate level, which is maintaining 9 percent growth, but in the structural or sectoral levels. The government is worrying most about the agricultural and automobile sectors, which may be easily affected by renminbi revaluation, and the unemployment problem induced by revaluation. Currently FDI in the PRC is one of the major sources for absorbing excess labor and mitigating the unemployment problem. If the renminbi is sharply appreciated, the PRC’s noncompetitive agriculture sector and SOEs will be affected and more excess labor will be created; FDI may somewhat decline due to the higher operating costs in the Mainland. Overall, prices have remained stable in the PRC. However, inflationary pressure, especially in terms of real estate price has been increasing in recent years and such a 4 trend may continue over the next few years. This pressure comes not only from the undervaluation of the renminbi, but from some other factors. Economically, to stabilize the renminbi exchange rate under the surplus in the current account, the PRC has to absorb U.S. dollars (USD) by issuing renminbi notes, which increases the money supply. Politically, the new PRC Administration differs from the old one in that it tends to accommodate all requests for development assistance from regional governments to address regional disparities. This additional funding to regional governments is also putting inflationary pressure on the economy as a whole. 3. Independent Monetary Policy and Capital Regulation The events of both the early 1970s and mid–late 1980s raised the traditional question of a trilemma among the three economic goals: ensuring free international capital transactions, maintaining independence of the monetary policy, and keeping a pegged exchange rate regime. In the early 1970s, Japan tried to maintain a pegged exchange regime while allowing adjusted inflation to achieve external balance. In the mid–late 1980s, under the framework of international policy coordination put forward in the Plaza and Louvre Accords, readjusting or keeping exchange rates stable became a major goal of monetary policy. Differing views may exist about the goals of monetary policy, but in this case, when monetary policy lost its freedom, domestic equilibrium was sacrificed. We must take note that the trilemma argument generally applies to small-sized economies and cannot necessarily explain the situation in the PRC. The argument states that a small country cannot carry out an independent monetary policy and a fixed exchange rate policy while keeping free capital flow. At its early stage of economic reform, PRC was economically a small country. Monetary policy was regarded as an indication of sovereignty and had to be maintained. If the trilemma argument applied to the PRC, although its capital account transactions are not fully liberalized, a fixed exchange rate could not be kept for long, especially when facing a trade surplus. 5 The PRC can no longer be regarded as a small country; the US pressure on the renminbi exchange rate shows its economic significance. As a large economy, the PRC can carry out an independent monetary policy under a fixed exchange rate regime with regulated capital transactions. Thus, for the PRC internally, a fixed rate regime may not be a very serious problem, although it may result in external imbalance and incur foreign pressure. These imbalances are caused not only by the exchange rate, but also by other factors, such as the US war on terror and the collapse of the US bubble economy. In fact, the current problem between the PRC and the US could be resolved through either external or domestic adjustment—adjusting the renminbi exchange rate is only one of the options available. Regarding regulations on capital transactions, the PRC is moving to lift regulations on capital outflow with the “Go Overseas” (Zou chuqu) policy, which is expected to mitigate appreciation pressure to some extent. However, there would be an increasing risk if the PRC further deregulated capital outflow while keeping a rigid exchange rate regime. This is the issue of policy sequencing. In the case of Japan, the move toward a floating exchange regime took place in tandem with the deregulation of capital account transactions. 4. External Imbalance and Exchange Rate Adjustment Japan’s experience also indicates that external balance cannot be achieved only through exchange rate adjustment. Currency appreciation is generally expected to raise export prices in terms of USD, which cuts down price competitiveness and decreases export volume. However, in the mid-1980s, export prices in USD terms were raised by only 50 percent in terms of the percentage change of yen appreciation and the overall export volume was not much affected. The remaining 50 percent was absorbed by the streamlining efforts by the enterprises and the decline of the prices of imported raw materials. 6 Overall saving should be matched by overall investment, i.e. over saving in the domestic sector, should be offset by over investment in the external sector. The current I-S imbalance reflects a domestic I-S imbalance among the countries concerned. Since under a free international capital flow regime, the exchange rate itself is deeply affected by capital flow and interest rates, the adjustment role of exchange rates to current balance tends to be diminished. Therefore, focusing on the structural I-S imbalance of each country is essential to solve external imbalance problems. In the PRC context, the current surplus is roughly matched by huge over-saving in the household sector. Since exports by foreign-invested companies account for more than half of the PRC’s total exports, exports may not be seriously affected by appreciation of the renminbi. Companies that import raw materials and intermediate goods from other countries could offset the impact of the increase in export prices by a decline in import prices. 5. Impact on Different Interest Groups Different interest groups are affected differently by currency fluctuation and some groups have a bigger voice than others. Balancing interests is important, yet difficult. For Japan, doubtless the manufacturing industry sectors such as steel and machineries suffered from the appreciation of the yen, and they had more ability to influence policymaking. Meanwhile, non-manufacturing industries and consumers who must have benefited were not so politically influential, and their views were not reflected in the decision-making. Who in the PRC benefits and who loses due to the appreciation of the renminbi? State-owned enterprises (SOEs) and state-owned banks (SOBs), having no international competitiveness, and other export industries including agriculture will definitely suffer. Foreign-invested companies in general will also suffer. This may affect FDI as a whole, but the effect should not be too serious—many foreign-invested companies are no longer looking only for cheap labor in the PRC, but are looking at the huge potential of the domestic market. Consumers may stand to benefit from renminbi appreciation. As for the political influence of each group, the SOEs and 7 SOBs may still have big voices but as the market economy matures and people become richer, private enterprises and households are gaining influence. 6. Long-term Impact of Currency Appreciation We should watch not only the immediate impact of currency appreciation, but also its long-term effect on the economy. The sharp appreciation of the yen triggered upgrading or conversion of the industrial structure in both the 1970s and 1980s and made Japan a more advanced or high-value added economy. For the PRC, the appreciation of the renminbi or moving to a more flexible exchange rate regime should provide a good opportunity to move toward a more market-oriented economy. The renminbi is severely undervalued under a fixed exchange rate regime, which distorts resource allocations. Appreciation of the renminbi will help to correct the distortion. We estimate that the currency is undervalued by 17% in terms of the nominal exchange rate. The variation of other estimates, however, indicates the difficulty for a planned economy to reach consensus on the appropriate equilibrium level. The best answer is to pursue marketization, adopting a more flexible exchange rate regime and letting the market determine the equilibrium level. However, the exchange rate is much more volatile than goods prices, and its sometimes explosive behavior may bring about some economic and political uncertainty. Considering the negative experiences of Japan and the PRC and the success of gradual reform, we think that the PRC should stay on the road toward a more flexible exchange rate regime with a gradualist principle and let the foreign exchange market explore its equilibrium level in two or three years. This should avoid causing too many shocks to the economy and give market participants more time to adjust their behavior and adapt to the new exchange rate. The principles of controllability, gradualism, and balance announced by the People’s Bank of China, are therefore the right ones. 8 Introduction Looking back at Japan’s history, the country experienced sharp appreciations of the yen twice after World War II, the first followed by hyperinflation and the second by the “economic bubble.” After the economic bubble in the late 1980s, Japan underwent a long recession, the so-called “lost decade.” Many Chinese economists are worried that if the renminbi were sharply appreciated for a very short period of time, the PRC might follow the same path of recession that Japan experienced in the past. Local Chinese people say, “一些経済学者認為中国人民幣如果迅速昇値、会重走日本経済不景 気的老路子 ”。[“Some economists are worried that if renminbi sharply appreciates, PRC economy might follow the same old path of stagnation as Japan experienced in the past.”] To avoid such a path, can the PRC learn any lessons from Japan’s experiences? 1. Developments in Early 1970s On August 15, 1971, US President Richard Nixon announced a new economic policy that consisted of nine economic measures. The purpose of this policy was three-fold: to curb inflationary pressure, to stimulate economic activities and increase employment opportunities, and to address the balance of payment (BOP). In particular, in connection with BOP policy, the US declared the temporary suspension of the convertibility of the US dollar (USD) to gold. That this is called the “Nixon Shock” in Japan shows how shocked the country was by this announcement and the following sharp appreciation of the Japanese yen. The suspension of the USD’s convertibility to gold was a natural consequence of several developments that necessitated a defense of the currency. After World War II, the world economy had been primarily led by the US. However, after the mid-1950s, the situation gradually changed. Japan and the European countries started to recover and even catch up with the US. Meanwhile, the US was bogged down with the Vietnam War in the late 9 1960s; the increase in military expenditures put an enormous pressure on the US economy. The US was also suffering from serious labor disputes. The relative international competitiveness of the US economy in relation to Japan and the European nations thus declined, taking with it the people’s confidence in the USD. Immediately after the US announcement, while European countries closed their foreign exchange markets, Japan kept its market open and tried to maintain a pegged rate system. During the following two weeks, Japan, facing mounting selling pressure of the USD, kept buying dollars, reaching an amount equivalent to 2 trillion yen (or 5.2 billion USD at that time). This amount was also almost equal to the total Bank of Japan lending outstanding to the commercial banks at that time. However, even such large-scale intervention did not achieve the intended goal and in the end major countries including Japan decided to abandon the fixed exchange rate system on August 30. Due to the intervention in the market during these two weeks, the Japanese commercial banks were left with excessive yen liquidity, so the Bank of Japan exceptionally issued promissory notes in the market and tried to absorb the excessive liquidity. In December 1971, the G-10 Finance Ministers met at the Smithsonian Museum in Washington, DC and agreed to readjust the exchange rates and resume a fixed exchange system. Under the Smithsonian Agreement, the value of gold increased from 35 to 38 USD per ounce, a 7.89 percent increase. At the same time, all of the major currencies appreciated significantly in relation to the USD; in particular the Japanese yen appreciated from the previous fixed rate of 360 yen to 308 yen to the dollar, a 16.88 percent increase. This was the highest among the major currencies. In addition, a more flexible wide band was adopted under the Smithsonian Agreement. Under the past fixed rate regime, currencies were allowed to fluctuate only within a very narrow range of plus or minus 1.5 percent. This range was widened to 2.25 percent each way under the Smithsonian Agreement. However, even after the agreement at the Smithsonian, the confidence in the USD was not fully restored: speculation on the possibility of further readjustment prevailed in the market and the selling pressure on the USD 10 continued. Finally, in February and March 1973, Japan and other European nations decided to give up the fixed rate system and eventually the fixed rate regime completely came to an end. As of early 1973, the Japanese yen had appreciated to around 260 yen per dollar. Japan’s economy had been experiencing a relatively long period of buoyancy since the mid-1960s. To avoid overheating the economy, the Japanese monetary authority started to adopt a tight monetary policy in 1969. With the slowdown of the Japanese economy, the trade surplus increased. In addition, low interest rates in the US led to an increase in capital inflow to Japan through foreign investment in Japanese securities. The short-term volatile capital inflow to Japan also contributed to widening Japan’s BOP imbalance and accumulating foreign reserves. In early 1971 Japan’s economy had shown signs of recovery, but the “Nixon Shock” and the following Smithsonian Agreement completely reversed entrepreneurs’ sentiments from optimism to pessimism and significantly cut down exports. The Economic White Paper of the Japanese Government at that time correctly mentioned that the radical ad