The Global Monetary Game In Crisis Era

Following spring this year

The outcome of the bill is unpredictable.

On Friday, the US House of Representatives fundraising committee first approved a fair trade monetary reform bill for China and some other countries, which will allow the US Department of Commerce to respond to the so-called "

The basic argument that American officials demand RMB appreciation is that China keeps the RMB exchange rate artificially low, so as to enhance the competitiveness of its commodities in the international market.

After the vote was passed by the committee, the house of representatives will vote in full this week.

According to the legislative process of the United States, once the house of Representatives voted, the bill will enter the Senate legislative process and be submitted to President Obama after the Senate passes.

Analysts believe that the bill may be blocked in the Senate in view of the uncertain situation in the Senate election.

Obama administration officials have said that Obama urged the Chinese side to let the renminbi appreciate, calling it the "most important issue" in the two sides' consultations.

However, the Obama administration has not yet indicated its position on the bill being pushed forward by the house of Representatives.

At the same time, many officials in the US also oppose putting pressure on China.

Fu Qiangen Frisbie, chairman of the US China Trade Commission (USCBC), said that the tariff legislation passed last Friday was "counterproductive" and "unlikely to significantly reduce the US trade deficit or create employment in the United States". (John)

The American Chamber of Commerce has even pointed out that the bill may be counterattacked by China and will eventually suffer from its consequences.

Robert Roche, President of the American Chamber of Commerce in Shanghai, said that if the US Congress passed legislation to force the renminbi to appreciate, the US businesses that were doing business there might be retaliated.

Analysts expect that the US pressure on further appreciation of the renminbi will continue until the November mid-term elections in the US Congress.

Appreciation is an active choice.

In September 28th, Adrian Foster Foster, head of the Asia Pacific Financial Market Research Department of Holland Cooperation Bank (Rabobank), told the first Financial Daily reporters that the current Sino US dispute on the RMB exchange rate should be considered in two ways: "on the one hand, the United States demands RMB appreciation to help the recovery of the economy". (Adrian)

The US economy is weak and needs help from all sides. Exchange rate policy is an important step.

But from the standpoint of China, the income of the unemployed in the United States is even higher than that of workers at the bottom of the country.

China, of course, believes that domestic development needs are more important.

"The exchange rate policy will be decided by China.

I do not think the United States has a "trump card" on this issue.

Forster said, "I also don't think the theoretical value will affect the real exchange rate.

The decision of the Chinese government is the ultimate driver.

Recently, the intensification of domestic inflation pressure has become the main internal pressure to speed up the expected appreciation of the people.

Forster predicts: "by next December, the RMB will reach 6.56 against the US dollar.

The rise in non food inflation will become a major factor driving the faster appreciation of the renminbi. "

A proper appreciation of the renminbi will help to alleviate inflationary pressures and import inflationary pressures generated by excess liquidity in China.

From historical data, whenever the inflation rate rises, the pace of RMB appreciation will generally accelerate.

One of the founders of modern microeconometrics, the 2000 Nobel prize winner in economics, Daniel McFadden (Daniel L. McFadden), told the reporter that during many visits to China, he had always stressed that it would be advantageous to reconsider the renminbi in the interests of China rather than the United States.

There are two reasons: "first, it is very important to have healthy foreign exchange reserves, and too high foreign exchange reserves will cause the economy to face too many risks.

Second, the appreciation of the renminbi will make it easier for the poor countries that were hard to export to export to China, which is also an opportunity for Chinese residents to enjoy cheaper goods.

Mcfadden said that these two reasons are usually not mentioned in the dispute between China and the United States, but it is worth considering.

International Monetary war in Post Crisis Era

More broadly, the pressure of RMB appreciation is not an isolated incident between China and the United States, but a game of global currency in the post crisis era.

Since the development of the economic crisis, an international exchange rate war has quietly started in the pattern of unbalanced global recovery.

Guido Mantega, the finance minister of Brazil, publicly stated the existence of the "currency war" in St Paul in September 27th. This is the private topic of many policymakers: "we are going through a currency war, and currency depreciation has become a global strategy."

Recently, Japan and South Korea have adopted a series of measures to intervene in exchange rate.

Aelianus, chief executive of PIMCO (Mohamed), recently wrote: "not all developed countries are willing to make it clear that they really want to see their currencies depreciate in value" (A.) El-Erian, 601099.

They see this as a way to help solve the formidable challenges of long-term economic growth, high unemployment and limited policy effectiveness.

According to the data released by the US government, the US trade deficit with China has expanded from US $123 billion in the same period last year to US $145 billion this 1~7.

The widening deficit and high unemployment rate, coupled with the support of the Democratic Party before the mid-term elections in November, is the most important choice for the US government.

Under the situation of domestic policy weakening demand, let the currency depreciate and help exports - such a "simple and crude" strategy has become a "meat and potatoes".

It is those of the developed economies that are happy to see the depreciation of their currencies and the emerging economies that are unwilling to let the currency appreciate significantly, which has led to an increasingly tense international exchange rate in the post crisis era.

Related correlation

According to the provisions of the bill issued by the US House of Representatives, in a 18 month period, if a country meets the following criteria, the currency of the country will be regarded as "fundamentally undervalued" by the United States: a country's government intervened for at least one foreign exchange market for a long time and a large scale; the real effective exchange rate of a country is at least underestimated by 5%; the global current account balance of a country is huge and this condition lasts for a long time; the foreign exchange reserve assets held by a government exceed the amount required for debt repayment in the next 12 months, or exceed 20% of the country's money supply, or exceed the total value of the country's previous four months of imports.