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28 October

转载:It’s Not Just the Currency

New York Times Editorial
Published: October 15, 2011

The Senate’s vote on Tuesday to punish China for cheapening its currency is not likely to persuade Beijing to change its ways. On Thursday, the renminbi actually fell more against the dollar. If the currency bill were to become law — a long shot given opposition by Republican leaders in the House — the more likely response from China would be some form of trade policy retaliation.

That is not an argument for doing nothing. But the United States and its allies need to find better ways to persuade China to change policies that are both battering the global economy and damaging its own development.

An artificially cheap currency is hurting China in many ways. The Peterson Institute for International Economics estimates that it costs China’s central bank $240 billion a year — more than its entire trade surplus — because it requires amassing huge reserves in dollars that are gradually losing value against the renminbi. And to buy United States Treasury bonds for its reserves, the central bank must issue domestic bonds that pay a higher rate of interest, losing money in the process.

This leads to other costs. To keep domestic interest rates as low as possible in order to reduce its losses, the central bank has forced bank deposit rates below the inflation rate, eating into the savings of ordinary Chinese and inhibiting spending. The cheap currency also drives inflation by making imports more expensive. And low interest rates are creating a bubble in housing and corporate investment.

For all these costs, China gets remarkably few jobs from its export-led strategy, which increasingly relies on mechanization to produce more sophisticated goods. Employment has grown by only 1 percent per year since 2004 despite G.D.P. growth of 10 percent.

And an export-dependent strategy is not sustainable with faltering global demand. China’s exports fell in the third quarter, suggesting foreign consumers are too spent to keep buying even China’s artificially cheap goods and keep sustaining China’s growth.

For China to develop further, it must rely more on its own consumers to buy its products and services. To get its citizens to spend more, the government must go beyond undoing the financial distortions — like artificially depressed interest rates that encourage huge savings. It should invest more in social goods, like its pension and health insurance programs, to encourage families to reduce their just-in-case savings and spend more.

Many Chinese officials realize this. In fact, “rebalancing” the economy is a prominent goal in China’s new five-year economic plan. The currency has been allowed to rise 7 percent against the dollar since June of 2010. Yet in late August the rise slowed to a virtual halt. Analysts fear that China is returning to its old playbook to support its exports amid a faltering global economy.

We have no sympathy for the desire of China’s autocrats to stifle political freedoms, but their fear that a swift change in course could lead to social and political upheaval is legitimate. Even if China’s leaders were persuaded of the need to change, it could not happen overnight. If the currency rose too fast, it would slash exports, bankrupt many firms and increase joblessness. Other needed components of reform — like raising interest rates and freeing credit from state control — could bankrupt firms and banks if done too abruptly.

In June, a report by the International Monetary Fund argued that, alone, a 20 percent revaluation of the Chinese currency would do little to improve the trade balances of its largest trading partners, including the United States. It recommended a reform package for China that included letting the renminbi rise at a brisker pace, allowing interest rates to rise, expanding social spending and allowing workers to move freely in search of better jobs.

A more expensive renminbi is part of the answer for China and its trading partners. But the trade problem won’t really be addressed until China’s consumers start saving less and spending more — including on American products.

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