RMB Needs Steady Adjustment Of Exchange Rate To Facilitate World Economic Recovery

As the US mid-term election approaches, some politicians in the US blame China for its economic problems.

Jim Rogers, a well-known investor, talked about the issue of RMB exchange rate in an interview with China Securities Journal.

Li Shanquan, managing director of the Oppenheimer foundation, believes that without market free trading, there is no basis for judging whether the renminbi will appreciate or depreciate against the US dollar.

He said, "the exchange rate itself is a constantly changing price signal, and this price can only be decided in the fully free exchange market through the paction between buyers and sellers. In the absence of market, it is lack of basis for the RMB exchange rate to appreciate and depreciate."

Hong Pingfan, director of the United Nations World Economic Monitoring Department, who has been engaged in international economic research, agrees with the idea of letting the market decide the trend of exchange rate.

He pointed out that there are many factors that affect the exchange rate. Trade is only one aspect. Purchasing power level is another angle, but no matter what kind of model and theory, it is impossible to predict the true price of the market completely.

For some western media quoted the so-called economists' data that the RMB should be appreciated by 40% against the US dollar, Hong Pingfan said: "about 10 years ago, some economists analyzed the RMB to us dollar exchange rate from 1990 to 2000 based on the statistical model, and concluded that the RMB was undervalued by 40%.

First of all, this conclusion is an outdated conclusion. From 2000 to 2010, the economic situation has changed a lot in the past 10 years.

Secondly, since 2005, the appreciation rate of RMB against the US dollar has exceeded 25%.

Hong Pingfan said that the ups and downs of the currency exchange rate are no good for China or the United States. The Chinese government's steady adjustment of exchange rate is practical and feasible.

In fact, American officials and legislators, some economists who advocate the appreciation of the renminbi, are not able to draw any economic evidence to show the reasonable rate of appreciation of the renminbi.

In this regard, Stiglitz, the Nobel Laureate in economics, said that the adjustment of the exchange rate should conform to the changes in the world economic situation.

He said that when the world economy is readjustment, we need to adjust prices, including exchange rate adjustments, but the exchange rate adjustment needs to seize the opportunity.

Maintaining stability of exchange rate is very important when the world economy is in crisis.

When the world economy recovers, moderate exchange rate adjustment is necessary.

But he objected to the ups and downs of the exchange rate market, which is not good for economic recovery.

"The appreciation of the renminbi will not solve the problem of Global trade imbalance," he said, taking the United States as an example: "the exchange rate adjustment can not change the trade deficit.

The United States will continue its multilateral trade deficit.

If the renminbi appreciates, the United States may import textiles from Bangladesh or Sri Lanka, but it is no longer possible to produce textiles on its own. "

Stiglitz also criticized the Fed and the ECB for injecting too much liquidity into the market.

"Ironically, the Fed's injection of liquidity into the market is aimed at promoting the recovery of the US economy," he said. "In fact, it does not help the US economy to disrupt the world economy."

"The main reason for the RMB exchange rate being included in the attack of the US government and members is the mid-term elections."

Chen Zhiwu, a professor of finance at Yale University, said: "the biggest economic problem in the United States is the problem of unemployment. But some people with common sense of economics know that letting the appreciation of the renminbi can not solve the employment problem of Americans. Politicians can take advantage of the exchange rate problem as a shield to show that they have no way to solve the economic problems."