专业外文文献翻译

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：英文原文

The

Renminbi’s

Dollar

Peg

at

The

Crossroads

In

the

face

of

huge

balance

of

payments

surpluses

and

internal

inflationary

pressures,

China

has

been

in

a

classic

conflict

between

internal

and

external

balance

under

its

dollar

currency- basket

peg.

Over

the

longer

term,

China’s

large,

modernizing,

and

diverse

economy

will

need

exchange

rate

flexibility

and,

eventually,

convertibility

with

open

capital

markets.

A

feasible

and

attractive

exit

strategy

from

the

essentially

fixed

RMB

exchange

rate

would

be

a

two-stage

approach,

consistent

with

the

steps

already

taken

since

July

2005,

but

going

beyond

them.

First,

establish

a

limited

trading

band

for

the

RMB

relative

to

a

basket

of

major

trading

partner

currencies.

Set

the

band

so

that

it

allows

some

initial

revaluation

of

the

RMB

against

the

dollar,

manage

the

basket

rate

within

the

band

if

necessary,

and

widen

the

band

over

time

as

domestic

foreign

exchange

markets

develop.

Second,

put

on

hold

ad

hoc

measures

of

financial

account

liberalization.

They

will

be

less

helpful

for

relieving

exchange

rate

pressures

once

the

RMB

basket

rate

is

allowed

to

move

flexibly

within

a

band,

and

they

are

best

postponed

until

domestic

foreign

exchange

markets

develop

further,

the

exchange

rate

is

fully

flexible,

and

the

domestic

financial

system

has

been

strengthened

and

placed

on

a

market-oriented

basis.

From

1997

until

July

21,

2005,

the

Chinese

authorities

pegged

the

renminbi(RMB)

price

of

the

United

States

dollar

within

a

narrow

range.

On

July

21,

2005,

China’s

authorities

moved

to

an

adjustable

basket

peg

against

the

dollar,

with

a

revaluation

of

the

central

RMB/$$

rate

of

2.1

percent

relative

to

the

prior

central

rate

of

RMB

8.28

per

dollar.

Very

notably

in

view

of

the

claims

that

China’s

exchange

rate

policy

is

dictated

by

the

imperative

of

maintaining

an

undervalued

currency,

the

authorities

resisted

substantial

devaluation

pressures,

at

the

cost

of

some

deflation,

during

the

Asian

crisis

period

starting

in

1997.

For

some

time

now

the

situation

has

been

reversed,

with

strong

revaluation

pressures,

speculative

capital

inflows,

and

gathering

inflati onary

momentum

in

the

economy.

The

ability

to

resist

speculative

pressures

comes

from

the

maintenance

of

restrictions

on

private

capital

flows,

especially

inflows,

as

well

as

from

administrative

controls

useful

in

restraining

inflation.

Nonetheless,

“hot

money”

inflows

have

helped

swell

China’s

foreign

reserves

immensely

in

recent

years.

Prior

to

July

21,

2005,

most

observers,

and

indeed

the

Chinese

government

itself,

acknowledged

that

China’s

exchange- rate

arrangements

were

unsustainable

and

undesirable

as

a

long-term

foundation

for

responding,

without

disruptive

episodes

of

inflation

or

deflation,

to

inevitable

real- side

shocks,

as

well

as

to

secular

changes

in

the

economy

such

as

real

appreciation

due

to

Balassa-Samuelson

effects.

At

the

time

of

unification,

the

parallel

rate

already

stood

at

a

depreciated

level

relative

to

the

official

rate.

Revaluation- cum-

“flexation”

is

a

response

to

the

situation,

including

the

external

trade

pressures

it

had

generated,

but

leaves

questions

about

how

flexibility

will

be

exploited

in

the

future.

So

far,

even

the

±

0.3

percent

margins

of

RMB/$$

flexibility

that

exist

have

not

been

utilized

fully.

Furthermore,

capital

markets

that

are

open

to

the

world

seem

a

prerequisite

for

a

modern

high- income

economy

such

as

China

seeks

eventually

to

become.

The

issues

concern

the

transition.

how

might

China

best

move

toward

a

genuinely

more

flexible

exchange-rate

regime.

And

how

might

it

best

dismantle

capital

controls.

And

how

might

it

optimally

sequence

these

two

conceptually

distinct

liberalization

initiatives.

In

the

following

pages

I

have

four

goals.

First,

to

provide

a

brief

overview

of

developments

in

China’s

real

exchange

rate,

external

accounts,

and

inflation,

thereby

filling

in

some

concomitants

of

the

nominal

exchange

rate

trajectory

in

Figure.

Second,

to

draw

parallels

with

the

experience

of

Germany

(still

the

world’s

premier

exporter)during

the

Bretton

Woods

era.

Third,

to

discuss

the

rather

successful

experiences

of

Chile

and

Israel

in

transiting

from

pegged

exchange

rates

with

capital

controls

to

floating

rates

with

financial

opening.

Fourth

and

finally,

to

sketch

a

blueprint

for

gradually

flexing

the

RMB’s

exchange

rate

in

advance

of

capital- account

liberalization.

A

feature

of

the

basket

system

is

that

intervention

in

support

of

the

basket

rate

could

still

be

carried

out

entirely

in

the

RMB/$$

market.

The

reason

is

that

the

basket

can

be

implemented

entirely

through

a

variable

RMB/$$

exchange

rate

target.

As

a

technical

matter,

the

band

could

be

redefined

each

morning

using

the

exchange

dollar

rates

prevailing

earlier

that

day

in

the

Tokyo

markets.

Or

it

could

be

updated

more

frequently.

The

decision

to

peg

to

a

basket

is

also

separable

in

principle

from

the

decision

on

the

denomination

of

foreign- currency

reserves.

Diversification

of

official

reserves

in

line

with

the

basket

weights

would

serve

to

stabilize

the

value

of

reserves

in

terms

of

RMB,

but

is

not

otherwise

a

necessary

adjunct

of

a

basket

peg

system.

Once

market

forces

are

given

greater

play

in

determining

the

day-to- day

value

of

the

RMB/$$

rate,

the

RMB

might

well

move

initially

to

the

strong

edge

of

any

band

that

was

established.

For

that

reason,

it

is

important

that

the

existing

capital

flow

controls

not

be

dismantled

until

the

exchange

rate

bands

have

been

widened

to

the

point

where

a

managed

float

has

been

achieved.

The

move

to

a

currency

band,

a

band

that

could

be

widened

over

time,

would

render

superfluous

some

of

the

ad

hoc

liberalization

measures

that

have

been

deployed

to

ease

exchange- rate

pressures.

Many

discussions

make

insufficient

distinction

between

enhanced

exchange

flexibility,

which

can

be

achieved

(with

less

currency

volatility)

under

restricted

international

financial

flows,

and

openness

of

the

financial

account.

The

two

are

completely

different,

and

a

less

risky

sequencing

would

tackle

the

full

gradual

relaxation

of

financial- account

controls

only

after

the

achievement

of

a

good

degree

of

exchange- rate

flexibility.

Eichengreen

(2005)

and

Prasad,

Rumbaugh,

and

Wang

(2005)

lay

out

the

case

for

this

sequencing

in

greater

detail.

The

manifest

hazards

of

opening

to

inflows

in

the

current

setting

of

domestic

banking- system

weakness

furnishes

one

of

the

most

compelling

arguments

for

placing

further

decontrol

of

the

financial

account

on

the

back

burner.

In

the

face

of

huge

balance

of

payments

surpluses

and

internal

inflationary

pressures,

China

has

been

in

a

classic

conflict

between

internal

and

external

balance

under

its

dollar

currency

peg.

Over

the

longer

term,

China’s

large,

modernizing,

and

diverse

economy

will

need

exchange

rate

flexibility,

and

eventually,

currency

convertibility

with

open

capital

markets.

A

feasible

and

attractive

exit

strategy

from

the

essentially

fixed

RMB