留学生作业写作：揭开中国货币被低估之谜

发布时间：2016-12-09 15:10

中国有一个固定的货币体系也被称为钉住汇率制度。在这种类型的货币体系中，货币的价值是固定在另一种货币或一篮子货币的价值上的。
至2005年，人民币兑美元汇率为8.28元。为了保持人民币钉住美元的水平，，中国央行必须向人民币提供人民币和外汇市场的需求美元。这种钉住制度为美国市场造成了一个严重的问题，因为美国生产商必须与中国的廉价产品，由于被低估的人民币。为了防止在美国市场，27.5%的关税是宣布对中国进口到中国调整人民币的价值。
2005年七月，中国宣布，它将在走向浮动汇率。按照这项新政策，它仍然在干预外汇市场，以防止汇率突然的动作，但它也允许渐进的变化。这一措施三年来人民币兑美元升值20%。

China has a fixed currency system which is also known as pegged currency system. In this type of currency system, the value of currency is fixed to the value of another currency or basket of currencies.

Till 2005, Renminbi was pegged against US dollar at 8.28 Renminbi/USD. To keep the Renminbi at pegged level, Chinese central bank had to supply Renminbi and demand dollars in foreign-exchange markets. This pegged system created a severe problem for US markets as US producers have to compete with Chinese cheap products due to undervalued Renminbi. To prevent this in US markets, a tariff of 27.5 percent was announced on Chinese imports until China adjusted the value of its currency.

In July 2005, China announced that it would move in the direction of a floating exchange rate. As per this new policy, it still intervenes in foreign-exchange markets to prevent large and sudden movements in the exchange rate, but it also permits gradual changes. This measure resulted in 20% appreciation of Renminbi against USD in three years.

Since mid-2008, Renminbi barely moved against the Dollar as Chinese exporter's sales overseas had dropped sharply because of the global economic downturn. It was almost certain that Chinese central bank returned to the policy of controlled exchange rate.

Objective: To know the reasons why China is keeping the currency stable and its relative consequences both visible and invisible.

Research  研究
Why did China resort to undervaluation? 
为什么中国采取低估？

Export driven employment 出口带动就业

China is the No.1 exporter in the globe and its exports contribute the most to its GDP (about 40%). During recession, the Chinese government had implemented a 4 trillion dollar stimulus package, of which the biggest bites were given to large state-owned enterprises which were all capital-intensive firms. So, although the output figures were soaring high it lead to more unemployment in the country and because of this, the Chinese policy-makers had to make sure that the export industry was growing as it was the largest and the most labour intensive sector which was the answer to china's rising unemployment rates. An appreciating Renminbi would only make exports expensive which is not desired by china evident from the graph above.

FDI generated employment 外商直接投资产生就业

Devaluating currency also attracts many foreign investors which strengthens the foreign reserves and generates more employment in China. In fact, almost 60 percent of Chinese exports to the United Statesare produced by firms owned by foreign companies, many of them American. These firms have moved operations overseas in response to competitive pressures to lower production costs and thereby offer better prices to consumers and higher returns to shareholders. The implication is that foreigners who invest in productive facilities in China are doing so solely because of cheap labor and cheap currency evident from graph moving up in the starting of 2009.

Migration 迁移

On top of the existing 103 million urban migrants, Chinese cities will face an influx of another 243 million migrants by 2025, taking the urban population up to nearly 1 billion people. In the medium and large cities, about half the population will be migrants, which is almost three times the current level. This adds to employment woes.

Oversupply: 供大于求：

China's economic statistics are based on recorded production activity, rather than being a measure of expenditure growth. As a result of stimulus the SOEs capital intensiveness made them produce huge amount of goods which added to the GDP but people savings were high. Thus consumption lagged behind production. The idle stock lying unsold can only be tackled by way of increasing exports.

How China did it?
As seen like the $ 4 trillion stimulus package, the government is implementing mostly industry friendly policies. These policies promise high industry growth and also more employment. A high industry growth will be backed by large import of raw materials. China being a savings-oriented economy more than a consumption-oriented economy this high growth will lead to over-capacity of production. This means there is less inbound demand and there is more need for exports.

For creating sufficient demand in the export market China will have to lower its product prices, consequently decreasing wages evident from China's suppression of trade unions. Also for achieving these low prices of products Renminbi will have to depreciate in order to raise the margin of profits of exporting companies.

The forex reserves earned from exports and FDI again lead to increase in demand of Yuan and thus its appreciation. To prevent this PBOC is buying required amount of US bonds so that demand of dollar offsets demand of Yuan and no effect on exchange rate.

Why US is getting too much problem with Undervalued RENMINBI?
The reason is Bonds valuing of $889 billion which makes China the biggest holder of US treasury bonds and the biggest creditor of US. So, US wants the value of the Renminbi to get appreciated so that the value of US reserves with China will fall which will bring down Chinese economy leading to release in pressure of Debt. If the Yuan is appreciated that means if its value goes down then its beneficial for US as they will have to pay back less

For example: If they have taken bonds when the value is 1$=8Yuan they have to pay back 800 Yuan but if the Yuan appreciates and comes down to 1$=6 Yuan then they just have to give back 600 Yuan which will be beneficial to US.

Secondly, because of the immense growth in the export market of China and the availability of cheap Chinese products in the US market, the domestic players are getting affected consequently leading to a rise in unemployment rate. It would be better for US if the Renminbi became stronger so that exporting will become more expensive for China and this will facilitate the domestic companies.

Whereas an appreciation in the Renminbi can also cause trouble to US as it will lead to inflation in the US and a decline in the real value of household income because the US consumers will lose the benefit of cheap Chinese products. The graph shows the positive trade balance of China vis-a-vis negative for US.

The Flip Side
Till now we have understood the impact of an undervalued currency on Chinese exports, employment and their corresponding impact on US. The responsibility for efficient allocation of $ 4 trillion stimulus was given to public sector banks. 1 trillion dollars were given to central government or to SOEs which lead to capital intensive production growth. The rest $3 trillion was the responsibility of local government or municipalities.

How does the government work it out? 政府是如何工作的？

Local Government Finance Vehicle: The local governments did not have the liberty to borrow money from the banks. So in order to raise this immense amount the local governments launched what is called Local Government Financing vehicles. These LGFVs allow LG to circumvent central government restrictions on direct borrowing. As much as 8000 such LGFVs exist. These act as conduits to the local governments for borrowing money from the banks. So once the LGFV's had borrowed money from the banks, the next step was to invest in a highly-profitable venture as the amounts borrowed were large and the interest charged were a costly affair. So this is how they went about it.

Land Sale Revenues: All unclaimed land in China is under the ownership of the local government. So in order to raise money the local government decided to put these lands for auction and LGFV which has a major stake held by the government usually became the highest bidders. Apart from LGFVs high profile developers also were awarded contracts on fair grounds.

Example: Shunyi County in Beijing's suburbs sold a residential plot for 400 dollars per square feet a new national record. The county booked revenue sales of 740 million dollars.

When properties are sold, transaction and profit taxes kick in. Developers pay more levies to the governments than they earn. So they made payments by way of mortgages to banks and since LGFVs are government sponsored and low interest rates prevail banks have no objection in providing loans. They have outstanding debt of 11.4 trillion Yuan and commitments of further 12.7 trillion Yuan. Once they had acquired the land, then they implemented projects like housing, infrastructure etc.

Time lag: However this was only a long-term investment as the mentioned modes of revenue could be collected only after the completion of projects which took 5-6 years. So in order to meet the interest of the loans borrowed from the banks LGFV had to borrow money from investors.

Savings>Consumption: By artificially depressing the value of its currency and making it difficult for locals to invest abroad, China has forced an artificial large amount of capital to chase after domestic investments, inflating property and stock prices.

Since there was depreciation in the value of Renminbi and also a bullish realty market in the economy, Chinese investors found it better to invest locally than abroad. Because of the same, LGFV issued bonds to these investors as the rising land values gave promise to the investors as their bond values were also raising with it. LGFVs issued bonds totaling 59.2 billion Yuan ($8.7 billion) in the first half of 2010. Of the 72 corporate bonds sold in the first half, 70 were rated. Moreover, low or negative returns from savings rates11 are prompting people to put their money in speculative investments, such as stocks and properties.

Related party transactions: But now in order to pay the interest of the borrowed from these investors, LGFV had to borrow more money from the bank. But in-order to prove the credibility of them to the bank so as to borrow more money what they did was they resorted to related part transactions i.e. they gave loans to the local governments and the banks considered these loans as assets and issued loans to LGFV. And with these loans LGFV paid the interest of the investors. So this was how the cycle worked.

Example: Hainan expressway co. in southern china is a government owned outfit deep in hock. It lent some $40 million to its founding shareholder the Hainan department of transportation and booked the loan due as an asset on its balance sheet. This classification provides the Hainan expressway with additional collateral to borrow even more in new construction loans from state owned financial institutions.

Realty bubble: Now the LGFV's having invested so much money on realty and projects for housing, infrastructure etc. what if they are not able to generate the expected revenue from it? As discussed earlier in order to sustain cheap Chinese products in the export industry the value of Renminbi has to be depreciated and for this the wages of the people of China will be brought down. So with the current scenario when these housing projects are ready for sale the Chinese consumers will not be having enough money to purchase them. Asset flipping can go on for so long. At some time you need paying tenants.

Instances of bubble burst:
Chinese companies in the chemical, steel, textile and shoe industries opening real estate divisions, expecting higher returns than in their core businesses.

High price-to-income ratios for real estate, such as in Beijing where the ratio is 27 to 1, five times the international average.

High price-to-rent ratios for real estate, such as in Beijing where the ratio is 500:1 compared to the global ratio of 300:1.

In the first 9 years of decade china added an average of 1.50 dollars in new credit to produce each incremental dollar of output. With so much money chasing domestic investments that ratio has jumped to $ 7 of fresh credit.

Analysis
If China Appreciate Renminbi

Exporters and manufacturers will see low margin as Renminbi will appreciate making their goods and services expensive to other countries or the companies which have stockpiled inventories that are priced internationally will have bad effect on the value of inventories due to appreciation of Renminbi. This will also impact the employment generation capability.

The people who will gain from the revaluation of RENMINBI will be the importers in Chinese economy as imports will be cheaper as compared to what they were before.

If china further depreciates

This scenario is unlikely as projecting 9% GDP growth and devaluation will only attract anti-dumping duty from various countries.

If China Sells USD in open market:

If China starts selling US dollar i.e. its reserves in open market or calling off US Treasury Bonds, this will lead to devaluation of US dollar leading to inflation in US because imported goods will be expensive for US consumers as well as for producers. To curb this inflation, US government would have to increase the interest rate in its economy which will further lead to recessionary situation as people who have their real income already affected from inflation cannot borrow

much. Yuan will appreciate and thus deteriorate exports and employment prospects.

If china stops buying USD

Then it has to look for another option to keep currency rate at the desired rate like gold. The Red Dragon announced recently that it has increased its holdings of gold by about 450 metric tons in the past six years.

If it raises the interest rates

This will mark the end of stimulus and raise the cost of borrowing but will also lead to high non-performing loans as the final consumption which is already low will go even lower due to tight monetary policy. This will also attract foreign investment again spiraling up realty prices.

If it lowers the interest rate

This will add to the Ponzi cycle created by LGFVs and may not raise final consumption to desired levels.

Recommendation 建议
The savings rate of china can't be brought down by following cheap monetary policy. It will only add to growing debt. Consumption can only improve with proper social security schemes and health reforms provided by government. Chinese households save a high portion of their income because they have to provide, on their own, for health care, retirement, emergency outlays, and other needs that are provided by governments in most advanced economies. If China provides them with these facilities consumption will rise automatically.

Wages of laborers need to be brought up as they are the final consumers. This will hurt export competitiveness but once the infrastructure projects like transportation are complete they will generate employment opportunities and offset the export sector employment gap.

本文编号：208559