How should China leverage its foreign reserves?
China's economic performance in recent years has been extraordinary. This year, growth in gross domestic product is forecast to exceed 9 per cent, with industrial production up a remarkable 16 per cent. Many fear that the country's financial system may be too fragile to sustain such growth in the long term. Fortunately, the country's burgeoning foreign exchange reserves could provide an ideal remedy.
At the root of the problems in China's financial sector are the continuing subsidies directed to state-owned enterprises via the banking system. The purpose of these is to prevent unemployment and the loss of welfare benefits to former and current employees. Although the government has closed the worst loss-makers, the remainder continue to be subsidised.
In the long term this is likely to damage China's currently high savings rate, the foundation of its economic miracle. At present, nearly 90 per cent of household savings are held in deposits with state-owned banks, partly because of the lack of alternatives. Most of these deposits are lent to SOEs. By contrast, most of the investment in the dynamic, private non-SOE sector that is propelling China's industrial growth is self-financed, or dependent on foreign capital. With few of these non-state growth enterprises being willing or allowed to issue shares, trade on domestic stock exchanges is mainly in SOEs, whose non-transparent accounting practices and perceived lack of viability deter households from holding much of their savings in them directly. Hence the thinness and volatility of the domestic stock markets, as even a little news from the opaque SOEs can trigger big price movements.
This lack of adequate savings vehicles and the low return on deposits in state-owned banks poses a threat to China's high rate of savings. This is likely to be compounded by the depressing effect on savings of an increasingly elderly population. But the state-owned banks cannot promote higher savings by raising their deposit rates without a rise in their lending rates to the unviable SOEs. These SOEs' losses would then grow, leading the banks to advance more loans to cover them, with the result that the banking system would be burdened with yet more non-performing loans.
These microeconomic difficulties in using interest rates to stimulate savings that can then be fed into a well-functioning stock market have macroeconomic consequences. As the central bank is in effect prevented from using the interest rate to manage aggregate demand, heavy-handed (and, given the self-financed nature of most non-SOE investment, inefficient) administrative measures are needed to cool the economy.
Furthermore, given the fragility of the banking system, fully opening up the capital account of the balance of payments and moving to a completely flexible exchange rate system is ruled out. I do not think China's export-led growth has depended on maintaining an undervalued exchange rate. As most of China's manufactured exports are processed goods with little domestic value added, changes in the exchange rate would have little effect on companies' profitability. The move to a flexible exchange rate is not only needed for a more efficient use of China's national savings, but also to fend off the growing pressures for a revaluation of the renminbi from private speculators and China's main trading partners.
Behind all these dangers to China's economy lie the social burdens carried by the SOEs. These must be removed so the viable SOEs can prosper and the rest can be taken over or closed down.
Fortunately, China's large build-up of foreign exchange reserves provides the answer. In October, these stood at more than $600bn, in a roughly $1,000bn economy. They are about 60 per cent of gross domestic product and are largely held in US Treasuries. Apart from the absurdity of a relatively capital-poor developing country making these large, unrequited transfers to a rich country, China must have seen a loss in the real value of these assets. Since its peak in 2002, the US dollar has depreciated by nearly 30 per cent in trade-weighted terms against big currencies.
There is a better way for China to use its reserves. At most, only a small proportion say $100bn is needed to fend off any speculative attack in order to maintain the dollar peg. The rest some $500bn, as well as any future accruals could be put into a social reconstruction fund under the central bank. This would function like any other big pension fund, such as that for the World Bank, whose annual return, averaged over 10 years, has been about 8 per cent. If the proposed fund for China could match this, it would yield an annual income of $40bn, or 4 per cent of GDP, which could be used gradually to cover the SOE's social burdens. The SOEs could then be treated as normal enterprises, to be privatised if viable and closed down if not.
This would bring many benefits. It would end the need for the subsidies that are sapping the banking system's vitality. Banks could instead concentrate on mobilising domestic savings and transferring them to high-yielding investment projects. SOEs with market-traded stocks would have more incentive to adopt transparent accounting. The authorities would be able to use interest rates as the primary means of managing demand. With a more robust financial system, the renminbi could even be allowed to float. In time, as the SOE problem receded, the income from the fund could become the basis for a fully funded pensions system for China's ageing population.
There are good reasons to worry about the robustness of China's financial system, it is true. But a country with $600bn in reserves is not exactly devoid of options.
The writer is the professor of international development studies at the University of California, Los Angeles
中国应善用外汇储备
近年中国经济表现出色。随着工业生产猛增16%，今年国内生产总值(GDP)增长预计将超过9%。许多人担心，中国的金融体系可能太过脆弱而无法长期维持这种增长。幸运的是，其迅速增长的外汇储备能提供一个理想的补救方法。
中国金融业的症结在于，银行系统不断向国有企业提供补贴。其目的是为了防止失业以及新老雇员丧失福利保障。虽然政府关闭了亏损最严重的企业，但余下的企业仍继续享受补贴。
从长期来看，这有可能损害中国经济奇迹的基石，即当前的高储蓄率。现在，近90%的家庭存款以储蓄形式存于国有银行，这部分是因为缺乏其它选择。这些存款大部分被借给了国企。相反，尽管充满活力的非国企私营部门是推动中国工业增长的动力，但其投资大多属自我融资或依赖国外资本。由于这些非国有增长型企业很少愿意(或被允许)发行股票，国内股市的交易主要集中于国企，而其财务运作不透明和明显缺乏活力，阻碍了个人将大量储蓄直接投资于这些企业。因此，国内股市存在深度不足和波动的问题。透明度极差的国企一有风吹草动，都能引发股价的大幅波动。
适当储蓄方式的缺乏以及国有银行存款的低回报率，都对中国的高储蓄率构成了威胁。人口老龄化加剧对储蓄的消极影响，很可能令形势更加复杂。但是，国有银行无法通过仅提高储蓄利率而不提高给无法独立生存的国企的贷款利率，来实现更高的储蓄率。这些国企的亏损因此将会增加，促使银行增加贷款来填平这些亏损，结果反而使银行系统为更多的呆帐所累。
利用利率促进储蓄的微观经济难题具有宏观经济后果，因为这些储蓄原本可流入运行良好的股市。由于事实上央行无法利用利率来管理总需求，为给经济降温，就需要使用强硬(且低效率，鉴于大多数非国企投资属自我融资性质)的行政手段。
而且，由于银行系统脆弱，全面开放国际收支资本账户并向完全灵活汇率机制转变的可能性已被排除。我认为，中国的出口导向型增长并非依靠维持低估的汇率。由于中国大部分制造业出口属国内附加值极低的加工品，汇率变化对公司利润的影响甚微。向灵活汇率制度转变不但是更高效率使用中国国民储蓄的需要，而且也可以消除私人投机者和主要贸易伙伴与日俱增的敦促人民币升值的压力。
所有这些对中国经济威胁的背后，是国企承担的社会负担。只有去除这些负担，那些有生存力的国企才能发展壮大，没有生存力的则被兼并或关闭。
幸运的是，中国的巨额外汇储备提供了解决之道。10月份，中国经济总量约为一万亿美元，而外汇储备超过6000亿美元，约占GDP的60%，且大部分是美国国债。作为一个资本相对缺乏的发展中国家，中国将其资本大量、无偿地转让给一个富裕国家的做法不仅荒唐，而且这些资产的实际价值必定还在遭受损失。自2002年达到最高点以来，按贸易加权计，美元对其他主要货币已贬值近30%。
中国可以更好地使用其外汇储备。为了维持与美元挂钩的汇率制度，最多也只需一小部分外汇储备，如1000亿美元，来击溃投机者的袭击。余下的5000亿美元以及今后任何的收益都可划拨由央行管理的社会重建基金。其功能类似任何一个大型养老基金，如世界银行的养老基金，按10年计，其平均年回报率约为8%。如果中国建立的这个基金可达此水平，其年收入将为400亿美元，占GDP的4%。它可被用来逐步接管国企的社会负担。这样，国企也能被视为普通企业，有生存能力的可私有化，否则可被关闭。
这将带来许多好处。它将结束对补贴的需求，而补贴正损害着银行系统的活力。银行转而可以集中精力调动国内储蓄，将其投入高回报的投资项目。国企股票上市交易，将更积极地采用透明的会计制度。有关当局也能将利率作为管理需求的主要手段。有了更健全的金融体系，人民币甚至可被允许浮动。随着国企困境的消除，基金收入迟早会作为一个基础，为中国老龄人口提供资金充裕的养老金体系。
人们固然有充分理由担忧中国金融体系是否稳固。然而，一个拥有6000亿美元外汇储备的国家不会无路可走。
本文作者是加利福尼亚大学洛杉矶分校(University of California, Los Angeles)国际发展研究专业教授。
