The Real Economy Will Play A Very Important Role In Stabilizing The Stock Market.

Li Daokui, director of the China and world economic research center of Tsinghua University, delivered a speech. He talked about the recently noticed RMB exchange rate market. He said that the people's Bank of China should clearly announce what the future exchange rate policy should be, which is to compare the package currency and maintain a stable range.

Moreover, we must abide by the 3 trillion foreign exchange reserves. If this matter can be stabilized and the exchange rate can be stabilized, it will play a very important role in stabilizing the real economy and stabilizing the stock market.

The following is part of the speech record:

Li Daokui:

I do not need to repeat the importance of stable finance. Everyone here should have a sense of approval.

How to stabilize finance? Nothing more than two things:

The first thing is that our own financial market must be very conscientious and prudent in regulation and management, such as the fusing mechanism.

Frankly speaking, there was no overwhelming opinion at that time that the fusing mechanism was not good, so after the four trading days, we suspended it, which is the process of learning together.

We are all afterwards Zhu Geliang, perhaps some experts have said that the fusing mechanism is not good.

Since there is a problem, we should correct it immediately. This attitude is good.

So some other financial reform measures also need to be learned.

For example, registration system, if the registration system out of a large number of new shares listed, if there is a problem, I am afraid that there will be some adjustment.

Therefore, I do not think that after the introduction of the registration system, there will be dozens of IPO days.

Indeed, the application system, filing system and examination and approval system are problematic, but it may still take a process to switch from the examination and approval system to the completely liberalized registration system.

Therefore, steady finance can not be too bold and bold enough to introduce policies on the basis of no careful experiments.

Why is the fusing mechanism unsuccessful in China? My personal view is that the fusing mechanism mainly deals with procedural pactions.

If you make up a program, a stock falls, B shares are to be sold, at this time there must be a fusing mechanism. Once a point falls, it will be artificially interfered and fuses. That's right. This is the fusing mechanism proposed by the United States after "black Monday", in order to calm down everyone.

But today we have very different opinions on the economic situation. Stocks are not traded. WeChat also exchanges views. The prominent point is that simple views are easy to win.

Fusing mechanism stocks are not traded, opinions are formed in trading, consensus is formed, positive feedback is formed, and the fusing mechanism will be opened again and will continue to fall.

So in this case, the market does not trade but cause panic.

Sometimes, simply trading, trading money PK, you think China's economic adjustment is no good, I think coal can also be restructured, using money PK, this time than the point of view, using language PK may be more rational and more stable, this is what I think this round of futile mechanism is not an important factor.

Again, why is there a decline in January 4th? Why did it not decline in December 31st last year? It was because there was no deal during the holidays, so we had PK.

The market of opinions is different from that of financial market, and the market of view is not rational as financial market.

This PK, PK produced a more pessimistic and more disturbing result.

Why did foreign financial markets become a problem in autumn? In September 15, 2008, the collapse of Lehman brothers and the outbreak of the financial crisis.

October 17, 1987 black Monday, August 15th dollars can not afford to lose, why is autumn? Everyone in the autumn is on holiday, the boss has a holiday, the brain keeps on, the viewpoint is endless, the viewpoint PK, therefore caused the eventful autumn.

I have repeatedly said that the financial sector is the most difficult autumn, this is the problem.

So the first thing we need to do is to stabilize the financial system.

We must be cautious about trial and error, and correct mistakes.

At the same time, for some obvious financial risks, for example, some products of P2P can be gradually exposed in the controllable range, and gradually scatter the "gas" in the middle of the bubble. This is the first thing.

The second thing is the exchange rate. The exchange rate has a great impact on us. Now it is the overseas market that is singing China's economy.

The offshore RMB market rate is lower than ours. The highest point is 300 basis points lower than our exchange rate. The people's Bank of China has recently reached 100 basis points.

There is a logic abroad. Foreign people believe that China's economy is worse than statistics. They think that the Chinese government will save the economy through the depreciation of the exchange rate. Therefore, they must speculate in the overseas market to devalue the RMB, forming a pattern of more than a year.

So what should I do? My suggestion is that, besides just saying that financial markets need stability, error correction and trial and error, the key is to work together.

I suggest:

First, the people's Bank of China should clearly announce what our future exchange rate policy should be, which is to compare the package currency.

We will maintain a stable package of currencies and depreciate against the US dollar, and we must stabilize at a level.

For example, we are stable in September 2015 and November.

For a basket of currencies, which is equivalent to the level of November 2015, we must maintain this stability, because we have the conditions, because we have a favorable balance of trade.

Second, capital accounts must be carefully managed, promised to be exchanged, and there is no strict control over commitments, especially in controlling our own large enterprises, whether private or state-owned.

If private enterprises have branches overseas, they must not be allowed to resort to fake investment.

If we keep this matter under control, our foreign exchange reserves should decline at a rate of less than 500 billion per year. My proposal will remain 3 trillion this year. If this matter can be stabilized and the exchange rate can be stabilized, it will play an important role in stabilizing the real economy and stabilizing the stock market.

It will also play a crucial role in promoting the internationalization of RMB, because the dollar is rising in the world and the US dollar is in short supply.

If our package is relatively stable, we will gradually believe in RMB.

Therefore, the process of US dollar appreciation is precisely the process of further internationalization of RMB.

But the key is not completely liberalized. The key is to maintain the relative stability of the exchange rate for a basket of currencies.

If this can be done, the countries around us will have a stabilizing effect on them. They will not play the game of competitive depreciation.

It can also play a stabilizing role, and the RMB will gradually become a stable currency, so that everyone will be more willing to borrow money and issue bonds with RMB. This will be the idea that the IMF dreams of turning SDR into RMB. If our RMB can keep stable with the SDR on the exchange rate, we will enhance the actual role in financial trade. This is what I want to say about the RMB strategy under the big power game.

If you think that the overseas market represents the market, you will have to depreciate the territory. If the territory is derogated, just like the people (603883) at the end of last year, they will see that they will be lower than seven this year. Do they want to convert the renminbi into US dollars?

Once this trend is formed, it will be very harmful for this round of economic adjustment.

Speaking of data, I have a look. In the past year of 2015, the figure of our foreign exchange reserves dropped by 500 billion.

I carefully analyzed how these 500 billion came, which was formed by addition and subtraction.

What is added? Last year, our current account surplus was about 250 billion - 300 billion, and the trade surplus was 600 billion, which is positive.

Another positive thing is that the actual use of foreign investment is rising, but we do not know the specific foreign exchange, some of the statistics are used to retain interest, the big number is over 100 billion.

I reckon about 650 billion dollars and 650 billion dollars on capital.

There is also a change in exchange rate. When the US dollar appreciates, the euro, the yen and the pound have all depreciated. What is the reason for the 650 billion dollar outflow? One is the speculation in the foreign market, and the expectation of the appreciation of the US dollar has already come into being. This is a fatal matter.

About 650 billion dollars is about 100 billion dollars, which is relatively legitimate. Foreign investment is the statistics of the Ministry of Commerce.

There are 500 billion dollars left, which may be short-term investment and speculative.

If this situation is redeveloped, if we run another 650 billion dollars this year, we will not be able to keep 3 trillion of our foreign exchange reserves this year.

In the last sentence, there is no direct game between China and the United States on the issue of RMB internationalization. I do not think there is conspiracy theory.

No conspiracy and ploy, they do not want the renminbi to become an international currency, as everyone knows.

But the key is how we do it ourselves, if the financial market is stable, the exchange rate can be more accurate, the clear declaration, the capital account, in this competition we can win, thank you!