Economic Downward Pressure Increases, Experts Suggest RMB Depreciation

Since the second half of 2014, the exchange rate of the US dollar has continued to rise, reaching the highest point since the financial crisis in 2008. "Theoretically, the renminbi will be linked to the US dollar to some extent and will not be affected by the appreciation of the US dollar. However, the appreciation of the US dollar will increase the exchange rate of the renminbi against other currencies and thus drag on the whole Chinese economy. " Lu Zheng commissar, chief economist of Societe Generale Bank (601166, stock bar), recently held a forum at the forum of Confucianism and Confucianism held by the Shanghai Institute of Finance and law.

He believes that the continued overvaluation of the RMB effective exchange rate will not only affect exports, but also systematically hurt the economic vitality of the three industries through multiplier effect.

Earlier, Wei Shangjin, the chief economist of the Asia open bank, had pointed out at the forum hosted by the Shanghai development research foundation that the overvaluation of effective exchange rates was not conducive to economic growth. China needs to be vigilant against the risk of overvaluation in the future.

"Lowering interest rates, lowering the standards and devaluing the renminbi may be a way to increase economic growth next year." Yu Yu, chief economist of Orient Securities, endorsed the views of Lu commissar on the forum of Confucianism.

However, there is opposition to the devaluation of the renminbi. Craig Chen, director of foreign exchange strategy in the Asia Pacific region of Nomura Securities, said in a review of his interest rate cut that continued weakening of the renminbi will not only attract pressure from international public opinion, but also depress the internationalization of RMB and the renminbi. International reserve currency Goals. "But in fact, the depreciation of the renminbi does not mean beggar thy neighbour, but reflects the basic situation of China's economy." Lu commissar pointed out.

Another view, which is not optimistic about the depreciation of the renminbi, is that the main reason for the current slowdown is domestic demand rather than export. Zhao Qingming, chief macroeconomic researcher at the Beijing Institute of financial derivatives, believes that in the current weakening of the euro and yen, the Renminbi should also weaken in theory, which is conducive to the real economy. However, the impact of the exchange rate on exports is often overestimated, and it is not advisable to use depreciation to maintain competitiveness.

In the light of economic growth In view of domestic demand rather than export, Lu commissar said that in the past few decades, the governments of developed countries generally regarded domestic demand as the main driving force for economic growth, but the path of globalization has driven these governments to gradually shift their attention to the competitive power of the domestic economy, that is, the extent to which a country can export its products abroad.

In general, depreciation It is beneficial to exports, and can also enhance the growth of manufacturing and service industries.

In March this year, the people's Bank of China "Research on the measurement of RMB effective real exchange rate and exchange rate imbalance" shows that in recent years, the RMB exchange rate imbalance began to show a small fluctuation around zero value, indicating that the exchange rate is approaching equilibrium. We should improve the elasticity of nominal exchange rate of RMB, change the expectation of unilateral appreciation thoroughly, avoid excessive arbitrage capital flow and new current account imbalance.

Yu Yongding, a member of the former central bank's monetary policy committee, told reporters: "let the market decide the exchange rate. The central bank will no longer intervene in the foreign exchange market under normal circumstances, inhibit the cross-border capital flows of short-term capital, and accelerate the development of financial hedging tools. These three points should be the principle of dealing with the current exchange rate.