Analysis Of China'S Exchange Rate "Regulatory Mystery"

< p > Milton Friedman talked about an important viewpoint at the seminar on the International Adjustment Mechanism convened by the Boston Federal Reserve in 1969. "Exchange rate is the only effective regulation mechanism to counteract monetary interference". This assertive "mired" theory is rare, and it has been seen in its "inflation whenever and wherever it is monetary phenomenon".

The symposium is at a time when the Bretton Woods system, which is linked to the US dollar and the gold, is at risk. Countries are struggling to cope with the imbalance of international payments.

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< p > how to build a new < a href= "//www.sjfzxm.com/news/index_cj.asp" > monetary system < /a > framework is already in the offbeat.

The top economists are eager to discuss and express their views. At the seminar, we brought forward the famous Robert Triffin of Terry Finn, put forward the famous "Mundell Fleming model" J. Marcus Fleming, and published the famous financial historian, Charles P. Kindleberger, and so on.

Not long after this seminar, the major developed countries in 1973 turned to the floating exchange rate system, and the exchange rate floating was used as a new adjustment mechanism of the balance of payments. This is precisely the conclusion of Milton Friedman.

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< p > however, it has not been long before, since twentieth Century and 90s, the Exchange Rate Adjustment Puzzle (Puzzle) has been widely developed in the major developed countries. That is, the exchange rate has not played the role of adjusting the balance of payments imbalance between economists and policy makers. The "elastic pessimism" (Elasticity Pessimism) has emerged. The United States and Japan are the most typical cases, which seems to have cast a shadow on the argument of Milton Friedman.

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< p > these theories progress is similar to the opening of the "black box" of a href= "//www.sjfzxm.com/news/index_cj.asp" > price theory < /a >, but it has not smoothed the exchange rate as the function of the adjustment mechanism of the balance of payments.

This also fully illustrates an iron rule: economic theory needs continuous innovation and development in the complex and rapid economic evolution.

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The trade surplus of < p > China has been growing rapidly for 10 consecutive years. It is a global wonder. IMF defines it as a Large and Persistent Surplus.

As a result, the historical scenario of RMB appreciation and huge trade surplus constitutes the "riddle of adjustment" of the RMB exchange rate.

The book systematically evaluates the impact of RMB exchange rate on trade imbalance since the reform in 2005. It takes the two roles of exchange rate, the cost and the price of financial assets as the logical starting point (the former is the real economy attribute, the latter is the monetary and financial attribute), and establishes a clear, logical and rigorous analytical framework, whose core is the exchange rate adjustment mechanism to the trade balance.

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"P >" for the monetary and financial attributes of the "a href=" "//www.sjfzxm.com/news/index_cj.asp" > exchange rate < /a >, the book makes a theoretical analysis of "hot money" under the trade item, analyzes its formation mechanism and empirically studies its influencing factors, and helps to understand the abnormal fluctuation of the current foreign exchange reserve.

From a theoretical point of view, the book is a rigorous theoretical application and attempt. In the perspective of pition economy, riddles highlight the generality and particularity of China's experience.

From a practical point of view, the book is an empirical study of the effect of China's financial reform. It calculates the RMB nominal effective exchange rate appreciation by 1% and the US dollar denominated trade surplus by 0.77%, which provides a reference for the central bank to evaluate and formulate exchange rate policies.

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In the third Plenary Session of the 18th CPC Central Committee, the RMB exchange rate system reform and capital account opening to the outside world were included in the key areas of financial reform. The acceleration of the opening up process of the financial industry is the trend in the future. P

The further promotion of China's economic restructuring will certainly provide richer research materials for economics. How to integrate and expand the application of mainstream theories in theoretical research will not only consider scholars' understanding of economic theories, but also reflect scholars' understanding of the breadth and depth of economic phenomena.

Only by combining them closely can we contribute to the theory and enlighten policy makers.

The above is my reading of the RMB exchange rate, trade balance and policy options, and readers.

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