A Capital Problem
Capitol Hill is growing impatient again with China's exchange-rate regime, threatening protectionist tariffs, and more. Three U.S. Senators even flew to Beijing this week to vent their frustrations. But they're missing the point. Banging away on the narrow issue of the renminbi's value diverts attention away from a more pressing problem: China's long-standing repression of its capital markets.
Of the world's top 10 biggest trading nations, only China has extensive capital controls. Sure, current-account transactions, or trading in goods and services, are liberalized. But Chinese citizens are barred from investing overseas, interest rates are heavily regulated and domestic stock markets are limited mostly to state-owned enterprises.
China pays a high price for such controls, which distort investment decisions and misallocate capital. Ordinary Chinese suffer too. Denied the right to seek higher returns overseas for their hard-earned savings, they have no choice but to take their chances with poorly regulated domestic investments. And that, in turn, helps explain why China's savings are so high -- and why the much-discussed U.S.-China trade deficit remains intact.
Ending draconian capital controls and allowing widespread privatization -- a necessary condition for the existence of competitive capital markets and efficient pricing -- would have many benefits. It would transform China's socialist system into genuine markets with real owners who would be responsible for their decisions. It would steer capital to its most productive uses. It would also attract foreign investments and help revalue the renminbi, also called the yuan, and rebalance the U.S.-Sino trade relationship.
All the more reason, then, for Congress to shift its focus away from the exchange rate. Since Beijing revalued its currency by 2.1% last June and switched to a basket of currencies approach, the renminbi has moved less than 1% against the greenback. So, Senators Charles Schumer and Lindsay Graham, have proposed a bill to impose prohibitively high tariffs on Chinese imports unless Beijing moves rapidly toward a more substantial revaluation. Along with Senator Tom Coburn, the three told their Chinese hosts on Monday that U.S.-Sino trade relations "are getting worse."
Rather than resorting to damaging protectionist measures, the senators would be better advised to help China move toward capital freedom. That means pointing out how China risks falling behind India, where Prime Minister Manmohan Singh recently put capital-account convertibility firmly back on the agenda. And it means supporting reformers such as Zhou Xiaochuan, the head of China's central bank, who recently committed his country to move in the same direction.
There have been other encouraging signs. The central bank's Monetary Policy Committee said in September that the market should "play its role in economic restructuring," including further interest- and exchange-rate reforms, and that "efforts should be made to advance financial reform" in order "to enhance the effectiveness of monetary policy."
But the real question is how quickly China will act. Most critics argue that capital controls cannot be relaxed until the banking sector is fully reformed. That argument suggests that if Beijing let the money flow out, it wouldn't flow back to China again, and domestic Chinese banks' balance sheets would suffer. Not only is that unlikely, but it ignores the important role that competition plays in fostering the most efficient use of capital.
The Chinese Communist Party itself may also put up strong resistance to giving up its control over the financial sector. Once Chinese citizens had a taste of controlling their own capital and private property became protected under the law -- as promised in the recently amended Chinese Constitution -- the last visage of central planning would disappear and the Party's power would fade.
That is why the Party failed to adopt the draft civil code -- designed to protect private property rights -- earlier this month at the National People's Congress. Indeed, Gong Xiantian, a law professor at Beijing University, strongly criticized the draft civil law because it fails to declare that "socialist property is inviolable." That mentality explains why China has been so slow in making the transition from financial repression and state ownership to capital freedom and private rights.
A modest proposal to allow some Chinese pension funds and insurance companies to invest overseas, known as the Qualified Domestic Institutional Investors scheme, is still not in place, five years after it was first mooted. However, Hu Xiaolian, head of China's State Administration of Foreign Exchange, said in February that Beijing would move ahead with capital account liberalization and encourage capital outflows. In reality, however, the amounts will be small.
Another much-hyped scheme to allow selected foreign investors to buy domestically traded stocks and bonds, known as the Qualified Foreign Institutional Investor scheme, is highly restrictive. Most fund managers don't want to tie up their client's capital in state-owned companies. Consequently, foreign investors still play only a minor role in China's casino-like stock markets.
China's top policymakers realize what needs to be done to improve the country's financial architecture. But we must be patient. It will take time for China to liberalize its exchange rate regime, open its capital markets, allow full convertibility of the renminbi, liberalize interest rates and use domestic monetary policy to achieve long-run price stability. Even more difficult will be the crucial task of privatizing China's stock markets, banks and state-owned enterprises.
As Senators Schumer, Graham and Coburn are discovering, the path ahead will not necessarily be an easy one, particularly if Congress focuses narrowly on the exchange rate. It's time to broaden the discussion -- and encourage capital freedom.
汇率问题？资本问题！
国会山对中国的汇率体制又一次不耐烦起来，威胁要采取加征保护主义关税等措施。三位美国参议员本周甚至亲临北京发泄心中的不满。但可惜，他们都没抓住要害。揪住人民币币值这个细节问题不放，其实是扰乱了人们对一个更加紧迫更加重要问题的关注：中国长期管制的资本市场。
中国是全球十大贸易国之一，但也是其中唯一大规模管制资本市场的国家。诚然，经常项目下的交易已经放开。但中国人仍不能投资海外市场，国内利率受到严格管制，国内股市基本上只有国有企业才能登台亮相。
这些管制扭曲了投资决策，也导致资本错配，而中国为此付出了巨大的代价。普通民众也因此受损。辛苦赚到的血汗钱不能投向海外市场寻求更高的回报，他们只好在监管不力的国内市场试试运气。这也揭示了中国储蓄率如此之高，以及引起激烈讨论的美中贸易逆差仍然不见好转的原因。
结束严格的资本管制，允许广泛的私人投资，这不但是资本市场竞争力和有效定价的必要条件，也会带来大量益处。这会促使中国的社会主义市场体制转型成为真正的市场经济，届时真正的所有者要为自己的每一项决策负责。这还会吸引外商投资、帮助人民币实现币值重估、使美中贸易关系重新达到平衡。
正因为如此，国会更应该将关注焦点从中国的汇率体制身上挪开。自从去年6月中国将人民币汇率上调2.1%，并采用一篮子货币定价以来，人民币兑美元汇率的波动一直没有超过1%。为此，参议员查尔斯?舒默(Charles Schumer)、林赛?格雷厄姆(Lindsay Graham)和汤姆?柯本(Tom Coburn)周一向接待他们来访的中国官员宣称，美中贸易关系正“日益恶化”。舒默和格雷厄姆曾提出议案，除非中国政府迅速行动，进一步大幅重估人民币汇率，就要向中国进口商品征收惩罚性高额关税。
与其挥舞大棒声称要采取破坏性的保护主义措施，几位参议员还不如听取建议，帮助中国放开资本市场。这就是说，要向中国指出它有落后于印度的风险，也意味著支持中国央行行长周小川这样的改革派。最近，印度总理辛格(Manmohan Singh)坚定地将资本账户可自由兑换重新提到政府工作日程之上，周小川最近也承诺中国将朝著开放资本市场的方向迈进。
其他方面也有一些令人鼓舞的迹象。央行货币政策委员会去年9月宣布，市场“应该在经济重组中发挥自己的作用”，包括进一步的利率和汇率改革，而且“应该努力推进金融体制的改革”，以便“增强货币政策的效果”。
但真正的问题是中国多快才会采取行动。大多数批评人士认为，银行体系改革完成之前，万万不能放松资本管制。他们认为，如果中国政府允许资金自由流出，它们就再也不会流回来了，国内商业银行的资产负债状况就会恶化。在我看来，这种情况非但不可能发生，这种观点也大大忽视了竞争在促进资本最有效配置过程中的重要角色。
中国的执政党自身可能也对放松金融体系的管制有颇多抵触。一旦中国公民领略了对自己的资本当家作主的感受，私有财产获得法律保护（最近召开的全国人大作出了这项承诺），计划经济的最后一抹色彩就会褪去，党的权力就会削弱。
这也就是中国共产党为什么在月初的全国人大会议上没有通过旨在保护私有物权的民法草案的原因。实际上，北京大学法学教授巩献田就强烈批评这部草案，称其没有宣布“社会主义财产是神圣不可侵犯的”。这种思维模式也解释了中国在从金融管制和国有产权向资本自由流动和私有产权的转型为何进展缓慢的原因。
合格境内机构投资者机制(Qualified Domestic Institutional Investors scheme, 简称QDII)是一项力度适中的提议，允许部分国内养老基金和保险公司投资海外市场。但在5年前就开始讨论的QDII时至今日仍未颁布施行。不过，国家外汇管理局(State Administration of Foreign Exchange)局长胡晓炼曾于今年2月表示，中国将逐步推进资本项目可兑换，并鼓励资本流动。不过，实际的流动规模会很小。
另一项广为宣传的机制就是合格境外机构投资者机制(Qualified Foreign Institutional Investor scheme, 简称QFII)，允许部分经过挑选的外国投资者购买国内股票和债券。但这套机制的限制性很强。大多数基金经理并不想把客户的资金投入国有企业。因此，外国投资者在赌场般的中国股市也只能发挥很少影响。
中国的高层决策者已经认识到改善中国金融体系需要采取哪些措施。我们必须耐心。中国需要时间，逐步放开汇率体制、放开资本市场、允许人民币完全可兑换、放开利率，以及利用国内货币政策实现长期的价格稳定。难度更大的是实现国内股市、银行和国有企业的私有化这项重任。
参议员舒默、格雷厄姆和柯本会慢慢发现，这恐怕不会是一条轻松的道路，尤其在国会紧盯著人民币汇率不放的情况下。其实，现在应该放宽眼界，讨论更广泛层面的问题，鼓励中国资本市场的开放。
