Ye Xiuliang: During the trade war, China must block financial hidden dangers

In the face of a trade war, the first step in China is to block or deal with the hidden dangers of its financial field, so that it can be invincible.(AFP)

According to the ancient Greek historian Andrdquo; when an emerging country rises, it will inevitably cause the possibilities of the existing power to disappear or even panic, which will inevitably lead to the long -term war between the two countries.. For those who believe in this discussion, the essence of the Sino -US trade war is not a trade war, but the strategy of the United States to prevent China's rise.

As early as the US President Trump did not accept the concession plan and lack of interest in China, he talked about the consultation of an additional 200 billion U.S. dollar tariffs. RecentlyAnd this view also provides certain evidence.

As a Chinese leader who is related to the than billions of people's well -being, under the premise of "do not want to play Andrdquo;, it must start making a long -term battle and Andrdquo for this worst situation.Preparation.Of course, it is best not to fight, but it is not advisable to over -expect the trade war to be compromised before the US midterm election, otherwise it may cause China to fall into a panic and loss due to underestimation.

It is also necessary to point out that because the major powers generally have considerable influence and affordability, if the two big powers really start war, the former (the influence of the great power) will mean that the situation of the war will be quite miserable.Seeing blood, seeing meat, and bone of bone and bone described, and the latter (the ability of the big country) means that this will be a long -lasting battle.Victory and defeat.

If the weaker party can be able to select the hidden dangers of economic and financial aspects of their own materials, and then offensive and defensive (knowing that the economic link can be attacked and that link cannot be attacked), it may eventually win the weakness; on the contrary, strong, stronger, stronger, strongIf the party thinks prematurely, he thinks that his own will win, and the high -level staff will have a big mistake.

Major hidden dangers in the exchange rate system

In the face of a trade war, the first step in China is to block or deal with the hidden dangers of its financial field, so that it can be invincible.As the original designer of China's foreign exchange system reform in 2005, the author will explain the number one financial danger of China today. In fact, it was actually the original exchange design of the last People's Bank of China, so that in August 2015, it would be "The thoughtful person Andrdquo; in the previous stock exchange attack, triggering Andrarrrrrrrrhives; a large amount of foreign exchange reserves lost Andrarr; the stock market fell to Andrarr; the capital of the stock market fell again, and the recent RMB exchange rate fell and fell and declined and fell.The Chinese stock market falls from the departure of this foreign exchange system.

If China does not modify this hidden danger, it will be chaotic without war, and one or two rounds will be defeated.

To understand this, the author allows the author to explain the exchange reform design, the early success of the People's Bank of China, and the subsequent deviation of the later.In more than a hundred exchange reform articles from 2004 to 2007, the author first explained Andrdquo in international macroeconomics and explained Andrdquo;Monetary policy (that is, controlling the capacity of monetary); 3. Two of them in the control rate capacity.

If the capital freedom flow and independent monetary policy are selected, the exchange rate can be greatly pushed into the level that the economy is unbearable by excessive funds, and it can also be exported by excessive funds to cause the exchange rate crisis.

Considering that China had to control the rising exchange rate at that time (now it was to control the decline in exchange rates) and control currency supply to meet the internal balance (that is, it was close to full employment and low inflation), the author suggested that the following transition period exchange design: It must be necessaryMaintaining capital control at that time (that is, short -term capital accounts non -free exchange), under the premise of maintaining independent monetary policy, with a slowly appreciation of 1%to 2%per year, it is out of the fixed exchange system at the time.At the same time, the demand for Andrdquo; at the same time (a large appreciation of a large appreciation meeting will be the "vibration -treated therapy andrdquo; trap, causing coordination in the economic system to fail, exporting companies have a large number of closures in the real time and a serious decline in the follow -up economy.

The appreciation rate of 3%to 5%per year will attract a large number of speculation inflows, resulting in too much currency supply and subsequent asset bubbles, until the Japanese bubble explosion and later lost 20 years later, so that the United States can continue to the world again without blood blades.Bulletin), allow China to continue its path of power.

Because slow appreciation can maintain China's strong economic growth and huge foreign trade surplus at that time, the former will mean that China will continue to be stronger with time, and the latter will greatly reduce the possibility of financial turmoil and allow China to continue to purchase overseas assets with foreign trade surplus.It is enough to cooperate with the level of China's future power.

It must be emphasized that maintaining short -term capital accounts non -free exchange and slow appreciation are the two focus of this design. The former means that speculative inflow must be illegal channels or abuse of legal channels, and even the risk premium and transaction cost involved in speculative inflows will be.The appreciation profit higher than 1%to 2%per year, thereby limiting the causes of speculative inflows and the number of final inflows.

Maintain high economic growth and huge foreign trade surplus (can increase the immunity and recovery of the financial turmoil and exchange rate crisis, and assist with assistance to accumulate overseas assets through direct investment through foreign direct investment), and allow China to continue its road.

Fortunately, the People's Bank of China still adopted most of these suggestions for the design of foreign exchange systems at the time, so that China allowed China to continue its path of power.Even the subsequent speculation inflows and excessive currency supply, support and trigger the stock market bubble and house prices from 2006 to 2007, but it has not affected the overall situation.

However, more importantly, the People's Bank of China has started more seriously in the past few years, that is, the opening of the above capital control without rigorous demonstration and thoughtfulness (including allowing the establishment of RMB futures, and excessive opening up some of the above -mentioned capital control (including allowing Hong Kong RMB futures to be established, and excessive opening up.Frequent account channels are sufficient to be abused as huge capital to flee), and in August 2015, a large number of enterprises and citizens were allowed to escape a large amount of capital through the abuse of these open channels.

For example, some financial institutions have caused a large number of foreign exchange reserves to lose, domestic credit atrophy, and high speculators in the Hong Kong RMB futures market through the interest rate sets of RMB futures in Hong Kong, domestic exchange markets and currency markets in the country.Leverage, the selling of the RMB in Mainland China is converted.

Some companies have fled a large amount of capital through the name of foreign direct investment; some nationals use credit cards to pay them to buy a large number of insurances with investment properties and deposit properties in Hong Kong;Import funds.

The latter is an example. As long as there are 80 million people abused the $ 50,000 quota for capital, they can completely consume the foreign exchange reserves of about $ 4 trillion at that time at that time.In fact, without rigorous demonstration and thoughtful.

Fortunately, the Chinese leadership may have subsequently stated a 3 trillion US dollars of dead line on the foreign exchange reserves.Then do the above interest rate sets to prohibit national credit cards from buying the above insurance. If the nationals want to remit the amount of 50,000 US dollars, they must issue relevant certificates. Later, the central government also punished enterprises to escape from foreign direct investment channels.

The above discussion explains that China must further block the channels of capital escape at this stage to ensure China's capital control capabilities.With this ability, it means that the short -term capital accounts are controlled, which affects the RMB exchange rate will mainly be normal accounts (such as import and export trade) and normal long -term capital accounts (Loss, domestic credit atrophy, and the high leverage of foreign speculators in the Hong Kong RMB futures market, converted to the selling pressure of the existing remittance of RMB China in Mainland China.

The above discussion explains that China must further block the channels of capital escape at this stage to ensure China's capital control capabilities.With this ability, it means that the short -term capital accounts are controlled, and the exchange rate of the RMB will mainly be normal accounts (such as import and export trade) and normal long -term capital accounts (such as normal foreign direct investment and foreign direct investment)Because China still has considerable foreign trade surplus, these normal changes will not be enough to cause depreciation pressure on the RMB.

In addition, with sufficient capital control capabilities (that is, the main loopholes of capital fleeing), even if the bank has increased through a large amount of currency during the trade war, and even quantitatively loose to support the stock market, bond market, and economic growth, it does not, it is notIt will cause the above -mentioned Andrarrrrrrhives; a large amount of foreign exchange reserves lost Andrarr; RMB exchange rates fell to Andrarr; the stock market fell to Andrarr;Land.

On the contrary, do not block capital escape channels, or open more short -term capital accounts (that is, further exchanged for capital accounts). During the trade war, there will be excessive capital fleeing, and the exchange rate crisis and the above -mentioned malignant cycle will occur.The probability of China in this trade war is quite large.

In fact, from the beginning of the trade war, the sharp decline in the RMB and the continued decline caused by the stock price caused by it reflected that a considerable amount of capital fled, and a certain number of unsatisfactory wars were chaotic.The Foreign Management Bureau and the ministries and commissions have a good way to escape these capitals to ensure that China stands in the unbeaten place.

(The author is an associate professor at the Department of Economics of Nanyang University of Technology in Singapore)