Appreciation Has Its Limits
The exchange-rate decision taken last Thursday by Beijing ranks among China's most significant economic decisions in recent memory.
The decision simultaneously achieves four major policy goals.
? First, yuan exchange rates are now set in reference to the value of a basket of currencies from China's major trading partners. Given that some degree of currency pegging can provide exchange-rate stability and be conducive to trade, this new arrangement should be superior to the previous system of pegging the yuan to only one currency. China, after all, trades with many countries.
? Second, the introduction of formal exchange-rate trading bands, with the value of the yuan now being allowed to fluctuate by up to 0.3% per day against the dollar and by even more against the euro and yen. The benefits of such flexibility will become more evident as these bands are widened in future, and China's macroeconomic management becomes more based on prices and less on administrative measures.
? Third, firms will have to learn how to deal with the exchange-rate risks that come with currency flexibility. Chinese trading companies and financial institutions may not yet be well equipped to manage exchange-rate risks, but managing such risks is an essential skill that they have to master sooner or later. The small amount of flexibility introduced by Thursday's decision could provide a suitable starting environment for firms to learn. The decision has provided the necessary conditions for China to develop its currency hedging market, which hitherto has been largely missing.
? Fourth, the new exchange-rate regime provides for more rule-based periodic adjustments in the yuan's central trading rates. The immediate adjustment this time was a 2% revaluation against the dollar, with rates against other currencies adjusted accordingly. Such periodic adjustments are a critical feature of the new regime, as they allow China a certain degree of freedom in balancing diverging economic developments and competing political demands from its trading partners.
For this new regime to be successful, the central bank's currency trading unit will need to upgrade its skills and be vigilant against speculative behavior in the currency market. An ideal situation would see the yuan's central trading exchange rate against the dollar remain, at least initially, within the 0.3% trading band around the new rate of 8.11 yuan to the dollar that was set last Thursday. If market conditions warrant any greater changes in its value, or widening of the trading bands, then they should be done by periodic adjustment. Overall stability of the yuan under the new regime, at least in the near future, is not only a stated objective, but also a measure of the success of the new currency regime.
One widely shared concern is that now China has allowed the yuan to appreciate by 2%, some Western politicians will want more. As a result, more foreign money will pour into China in anticipation of future revaluations, further fueling already speculative sectors in the economy as well as putting unbearable pressure on the new exchange-rate mechanism. But speculators should not doubt China's credibility in defending the new exchange rate, given its long experience in successfully maintaining a fixed exchange rate against the dollar -- even through the vicissitudes of the Asian financial crisis. In its domestic policies, China should continue to actively contain speculation in property and other assets, as speculative inflows usually first aim at rapid asset-price appreciation and only secondarily at currency revaluation.
The previous de facto dollar peg has, for the past decade, given China a nominal macroeconomic anchor, which in no small measure contributed to China's outstanding economic performance with low inflation and high but steady growth rates throughout that period. These performances were in sharp contrast to the period from 1980-95 when there was no dollar peg, and both inflation and growth rates gyrated widely. Now that this nominal anchor has gone, there is an urgent need for China to formulate a new monetary policy-making process that is more centralized and independent of political considerations, and can quickly and decisively react to events. In addition, what should be China's monetary policy goals and what are the effective means to achieve them? Contrary to most analyses, the greatest impact of last Thursday's decision will not be felt in China's external trade or U.S. bond prices, but in China's macroeconomic management.
China could have implemented the new currency regime without any initial revaluation. But the decision to accompany it with a small revaluation was a clever move that responds to both China's growing external surpluses and American demands for an appreciation in value of the yuan. Since the new basket arrangement aims to keep China's nominal effective exchange rate relatively constant, it's quite impossible for the yuan to appreciate against the dollar by the much larger amount that many U.S. politicians have demanded, unless the dollar declines dramatically relative to other major currencies.
That makes it almost certain that some American politicians will renew their demands for a more substantial revaluation of the yuan before too long. When that happens, I hope policy makers will honestly admit that the yuan exchange rate has a minimal impact on the U.S. trade deficit. The right way to address the U.S. trade deficit is not to restrict Chinese exports to the U.S., but to increase American exports, especially in the services sector. That will mean opening up our service markets even wider to foreign competition -- but China only stands to benefit from such increased openness.
Mr. Fang is deputy chief executive of the Shanghai Stock Exchange.
一个事关重大的决定
就人们记忆所及，上周四北京政府作出的汇率改革决定是中国在经济政策方面最重要的决定之一。
这一决定同时实现了四大政策目标。第一，人民币汇率就此实现与中国主要贸易伙伴国的一篮子货币挂钩。
由于汇率挂钩制可以带来一定程度的汇率稳定，且有助于贸易，因此，这种新的制度安排应优于此前人民币只与一种货币挂钩的做法。毕竟，与中国有贸易往来的国家有很多。
第二，引入了正式的外汇交易区间：人民币兑美元汇率每天可在中间价上下0.3%的范围波动，兑欧元和日圆的波动区间更大。如果未来允许浮动区间进一步扩大、中国宏观经济管理更多地依据市场价格而不是行政手段，那么这种灵活安排的益处会更明显。
第三，企业将被迫学会如何应对伴随汇率灵活性而来的外汇风险。目前中国的贸易公司和金融机构或许还不具备管理外汇风险的丰富经验，但这是一种基本技巧，他们迟早必须掌握这种技巧。
上周四开始实行的小幅度的灵活机制可以为企业开始学习风险管理提供一个适当的环境。最新决定为中国发展外汇对冲市场提供了必要条件，这类市场中国基本上一直处于缺失状态。
第四，新的汇率制度允许在交易中间价基础上依据规则进行更多的间断性的调整。这次立刻进行的调整是人民币兑美元汇率上调2%，兑其他货币汇率也相应上调。这种间或的调整是新汇率制度的一个关键特征，这种安排使中国在平衡不同步伐的经济发展和回应贸易伙伴国的政治需求方面能拥有一定的自由度。
为保证新制度的成功实施，央行外汇交易部门将需要改善技巧，并对外汇市场的投机行为保持警觉。最理想的情况是人民币兑美元的中间价能保持在8.11元基准汇率上下0.3%的范围内，至少开始阶段最好能如此。
如果市场条件要求对人民币汇率或汇率波动区间作更大变化，那么这种变化应当以间或调整的方式实现。新制度下人民币汇率的总体稳定不仅是央行公开宣称的目标（至少近期如此），也是保证新制度获得成功的一项措施。
市场普遍存在的一种担忧是，人民币升值2%之后，西方一些政治家会要得更多。在这种思路影响下，将有更多外国游资涌进中国以图在未来的升值中获利，从而使中国经济中本已出现投机因素的领域进一步升温，并给新的汇率机制带来难以承受的压力。
不过，投机人士不应对中国捍卫新汇率的决心和能力有所怀疑，因为中国在维护人民币兑美元的固定汇率制方面已有长期的成功经验，即使在亚洲金融危机期间也没有动摇。在国内政策方面，中国应继续积极遏制房地产和其他领域的投机活动，因为投机资金通常总是最先瞄准资产价格迅速升值的领域，其次才是货币升值。
人民币实行了10多年的钉住美元的汇率制度成为中国把握经济政策的“名义锚”，它对中国经济这期间取得的出色成就所发挥的作用不可小觑。10年来，中国经济在高速稳步增长的同时维持了较低的通货膨胀率。这与人民币开始钉住美元之前的1980-1995年期间的情形完全不可同日而语，在那期间，通货膨胀和经济增长水平经常出现巨大波动。
现在，随著“名义锚”的消失，中国急需建立新的货币政策决策机制，这一机制应更集中，减少政治因素的干扰，并能迅速果断地对突发事件作出反应。另外，中国的货币政策目标应该是什么？实现该目标的有效措施有哪些？与大多数的分析意见不同，我认为，中国上周四的决定最大的影响不在中国的出口或美国国债的价格上，而将体现在中国的宏观经济管理方面。
中国本可以不上调人民币汇率而直接开始实行新的汇率制度。不过中国没有这么做，这堪称一个明智之举，小幅升值对中国日益扩大的外贸顺差和美国对人民币升值的呼吁作出了一定程度的回应。由于新的与一篮子货币挂钩的安排使人民币的名义有效汇率基本保持不变，因此，许多美国政界人士要求人民币大幅升值的愿望根本没有可能实现，除非美元兑其他货币大幅贬值。
因此，几乎可以肯定，一些美国政治家不用太久就会重新提出让人民币更大幅度升值的要求。如果出现这种情况，我希望美国的决策者能客观地承认，人民币汇率对美国贸易逆差的影响微乎其微。
美国解决贸易逆差的正确做法不是限制从中国的进口，而是扩大美国的出口，特别是服务领域的出口。这将意味著扩大中国服务市场的对外开放，而中国从这种进一步开放中只会获益，而不会受损。
（编者按：本文作者方星海是上海证券交易所副总经理。）
