Zhu Guangyao: China Must Be Very Vigilant Against Currency Competitive Depreciation.

On foreign exchange reform

Closer to reflecting supply and demand goals

NBD:

Inflation hits the 100 point. What about RMB?

Zhu Guangyao: with the change of international economic situation, especially the adjustment of monetary policy in developed economies, the US dollar has gradually strengthened.

Over the past six years, the US dollar has seen a considerable devaluation. Now it is not only stable but also hitting new heights.

We must pay attention to the changing situation of the international financial market, because the European Central Bank has to implement the monetary quantitative easing policy, the monthly purchase quantity is 60 billion euros, the euro continues to soften.

Now the renminbi remains quite strong. In terms of the composite index [3.10%], in addition to the US dollar, the renminbi is the second largest currency.

Under these circumstances,

The basic objective of the reform is to float in two directions, reflecting the increasingly close goal of market supply and demand.

The basic stability at a reasonable and balanced level is in line with the needs of China's economic development, and is also the expectation of other countries for China.

At the same time, we must pay close attention to the changes in the international market.

NBD: you say that the two-way fluctuation has been maintained, but the RMB has been depreciating. How do you understand this?

Zhu Guangyao: when the renminbi has risen, it is now two-way fluctuation. On the whole, it still depends on a basket of monetary policies.

NBD: now that the US dollar is strong, it seems that the world's active participation in quantitative easing is not bound by IMF.

Quantitative easing monetary policy is a special monetary policy for developed economies after the financial crisis.

Its essence is that when interest rates fall to zero, the central bank issues bonds to issue bonds.

Despite the fact that the US has withdrawn, a large number of US dollars have been issued over the past few years.

The European Central Bank is also implementing quantitative easing of 1 trillion and 100 billion euros, and Japan is also implementing quantitative easing of 80 trillion yen.

President Xi Jinping repeatedly stated China's position at the G20 leaders summit. As a responsible big country, China has played a positive and constructive role in the G20 process and has made great contributions to stabilizing the global economic and financial market.

Now, China and Europe have maintained close macroeconomic control to prevent spillover effects.

We demand that the G20's clear policy to prevent competitive devaluation is reflected in the member states.

First of all, we must safeguard China's interests and take the G20 as a whole, and the member states have the responsibility to fulfill their commitments to G20 in order to effectively maintain global economic stability and macroeconomic policies of Member States.

Talking about risks

Highly vigilant currency competitive devaluation

NBD: what are the risks and challenges facing China's economy in the global environment?

Zhu Guangyao: this year's macroeconomic policy is to implement a proactive fiscal policy and a prudent monetary policy. Fiscal policy should be strengthened and effective. Prudent monetary policy should be tighten up.

In 2015, China was faced with the challenges of the three phase of overlay in the country, as well as the very complicated situation abroad. The task of achieving the goal of economic growth is very arduous.

First, the global economic growth is sluggish. IMF has lowered the global economic growth rate this year. If global growth continues to be weak, we must be highly vigilant. Second, the level of employment in the world has not recovered to the level before the outbreak of the financial crisis. The unemployment rate in some European countries has reached 10%. Unemployment has not been well resolved. Third, the global trade growth in recent two years has been lower than the economic growth. This is China's external challenge. China will unswervingly support the multilateral trading system. Fourth, there is also geopolitical politics closely related to economic development. The situation in Ukraine has a direct impact on global economic growth.

NBD: will China's economy face the challenge of global quantitative easing?

Zhu Guangyao: now the global interest rate level is at the lowest level since the Second World War, and it is reflected in every business cycle.

European deposits have negative interest rates, with a benchmark interest rate of 0.65%.

The deposits of the ECB and UBS are all negative interest rates, which are related to the weak economic growth. China must be highly vigilant.

The global concept of deflation is not fixed, but it is generally believed that CPI is deflation below zero for two consecutive months, or at least the country is facing severe deflationary pressure.

The ECB has launched a 1 trillion and 100 billion euro quantitative easing policy, and the Federal Reserve's routine meeting at the end of this month is also important, and the United States will change the low interest rate level since the financial crisis is worth paying attention to.

The global financial crisis is intricate and related to the extreme easing policy and its impact on exchange rate.

G20 has repeatedly stressed that consensus can not implement competitive monetary policy, and monetary policy can only target domestic economic conditions.

However, we must be very vigilant against the depreciation of currency competitiveness.