The impact of U.S. economic easing on China

In response to concerns that the Fed's new round of quantitative easing will have a negative impact on China, China's current foreign exchange management system controls the capital account, and abnormal capital inflows will either not come in or will take a detour. In the process of detouring, the governing body will hedge on the aggregate.

If short-term speculative money is going to come in, we want to put it in a pool and not let it flood into the entire Chinese world economy. When it retreats, we release it and let it go, so that we can reduce the impact of capital deficit flows on China's economy at the macro level. This measure is here to emphasize its importance.

Of course, it also raises another kind of problem, which is that it comes in and goes out, and in the process it finds opportunities, such as the difference in interest rates, for example, the movement between currency exchange rates, so that they may have speculative returns. I think on the one hand, we should see the importance of total control, and on the other hand, we should also see that if there is some opportunity in this world, then there will always be people who do these actions.

I can recall that in the late 70s and early 80s, we were second-hand dealers to get the price difference, which means that if there is an opportunity to create in the field of commodities, you can hardly say that anyone does it, although you hate this kind of behavior, but it is also an economic opportunity, and it is also a logic of the market, and there will inevitably be this practice. If you want to stop it, you have to think of an effective way, you can't stop the train, then the cost of the entire national economy is much greater than the cost of suppressing the second-tier traffickers, so you have to weigh the cost. ”

The announcement of the second round of quantitative easing monetary policy by the United States "shook the global financial market" with an investment of 60 million US dollars, which was actually a weakening of the dollar and forced the appreciation of the RMB and the currencies of other countries around the world. The United States has an agreement with OPEC to use the dollar as the settlement currency for oil. In order to ensure that the interests of oil-producing countries are not harmed, the only way to do this is to keep pushing up oil prices at a time when the US dollar is depreciating sharply, and this is in line with the strategic intentions and interests of the United States.

International commodities are priced in US dollars, the US dollar is depreciating, the international ** market, **, wheat, corn, cotton are growing wildly, and global inflation has begun.

The expectation of RMB appreciation, the profit-seeking instinct of funds can make overseas hot money continue to pour in, the housing market has created a bubble, under the country's most severe real estate policy crackdown, part of the money has flowed in, the shelf-stable food market, created garlic mung beans and some commodities soaring. Economic figures for October were released, and inflation in our country exceeded 4%. Our country has entered a period of inflation.

As it stands, the appreciation of the renminbi has triggered inflation.

The book examines the potential risks facing China's financial opening up from a new perspective, and provides new ideas for maintaining China's monetary security. So this book is worth reading, about whether middle school students should read it or not, you can read it, just don't believe too much in the sensational arguments. As an important cornerstone of conspiracy theories, Currency Wars argues that international bankers not only manipulated politics and created wars, but also created financial crises, including the Great Depression of 1929.

These accusations are bizarre and bordering on absurdity. Anyone who understands the basic workings of finance knows that the profitability of financial institutions is closely and positively correlated with the stability of financial markets and macroeconomic prosperity. When the economy is booming and the market is booming, the financial sector is profitable.

When the economy is sluggish and the market is sluggish, the business environment of the financial industry deteriorates significantly. Especially every time a financial crisis occurs, financial institutions face huge risks, massive losses, and even collapse. During the Great Depression, hundreds of financial institutions, including commercial banks, ** companies, and insurance institutions, collapsed.

The latest round of the U.S. subprime debt crisis is the latest example of the impact on many of the world's largest financial institutions, including Merrill Lynch, Citigroup, and UBS. According to the book "Currency Wars", every financial crisis in history has been deliberately created by international bankers, which is contrary to basic common sense. The book also claims that it is illogical and unreasonable for international bankers to seek cheap money and inflation.

Inflation shrinks the real ** of loans, and the banks, as creditors, lose the most and are naturally the most unlucky. The book does not explain to the reader why international bankers are not looking for stability, but for inflation.

It could lead to an economic crisis.

Copy who wouldn't! Comical!

Legal analysis: First, China's dollar assets have shrunk severely. China's foreign exchange reserves now exceed one trillion US dollars, of which US dollar reserves account for about 70%, and China has purchased more than $900 billion in US Treasury bonds.

The U.S. "quantitative easing" has depreciated the U.S. dollar sharply, resulting in heavy losses in China's U.S. dollar assets. From June to early November 2010, the U.S. dollar depreciated by 3% against the renminbi, costing China's foreign reserves and holdings of U.S. Treasuries $54.6 billion and $27 billion, respectively.

The second is to impact China's foreign trade exports. For every percentage point of appreciation of the renminbi against the dollar, China's foreign trade exports will fall to. As a result, the imbalance in China's import and export growth has intensified, with the growth rate of exports far lower than the growth rate of imports, and the foreign trade surplus tending to shrink.

The third is to exacerbate inflation in China. The U.S. move has pushed up international commodities. China's already high inflation rate has risen further since November 2010 due to imported inflation.

At the same time, China's cost of paying for imports has increased significantly. For example, due to international oil prices, China will need to spend billions of dollars more on oil imports every year in the future.

Fourth, bear the risk of more international hot money inflow. Experts estimate that 40 percent of the $600 billion issued by the United States will flow into China through various channels. The influx of hot money will exacerbate the asset bubble in China's capital market, leaving evil consequences and hidden dangers for China's economy.

Legal basis: Regulations of the People's Republic of China on the Administration of Renminbi

Article 2 The term "renminbi" as used in these Regulations refers to currency issued by the People's Bank of China in accordance with law, including banknotes and coins.

Those engaged in the design, printing, issuance, circulation and other activities of the renminbi shall comply with these Regulations.

Article 3 The legal tender of the People's Republic of China is the Renminbi. No unit or individual may refuse to accept all public and private debts within the territory of the People's Republic of China in renminbi payment.

1.This move by the United States may set off, or has set off, a new rise of protection attention. I think we in China should be the prophet of Chunjiang plumbing duck.

I said at the beginning of the film that Obama was doing this today, and it was foreshadowed. Obama** openly wants to buy American-made goods in the United States. Because the world is basically denominated in dollars at present, and the United States starts the money printing machine, which will inevitably cause inflation under the low economic growth of the United States.

And in order for the United States to alleviate this decline, it must pass it on. It is necessary to pull export bans or reduce exports to outflow more than dollars, so as to pass on domestic inflation. After all, most countries exchange dollars for storage.

2.China's holdings of U.S. Treasury bonds have reached $739.6 billion, more than $100 billion more than Japan, which is second place, and accounts for 7 percent of U.S. foreign debt. In the short term, the Fed's bond purchases are relatively safe for China** and commercial banks to hold more than one trillion U.S. Treasury bonds, "two-house" bonds and other corporate bonds.

Although the interest may be lost, at least the principal is ***. ”

3.The depreciation of the US dollar will push up the price of resource products such as oil, and the rise in costs, which is undoubtedly "worse" for the global economy and may further delay the pace of recovery in most countries.

4.It is the eldest brother who consumes and the younger brother who pays the bill.

5.In addition, the United States wants to buy toxic assets, in fact, it is trying to inject a large amount of liquidity into the market, and by injecting capital into financial institutions, the problem assets will be packaged and "covered", although the crisis can be temporarily alleviated and will not deteriorate further. But at the same time, there are bigger "hidden dangers".

How should China deal with it?

The author believes that there are four points:

1.Accelerate the internationalization of the recommended renminbi and reduce the use of US dollars for international settlement. This would reduce the amount of foreign exchange reserves in our US dollar. After all, we have too many foreign exchange reserves, and under such a rogue policy as the United States, we are the biggest victims.

2.and countries have united to reduce or weaken the dollar's position and its financial position in the United States and increase our voice. At the upcoming G-20 summit on April 1, British Prime Minister Gordon Brown began to say early that he would change the current world financial landscape.

3.Try to reduce the dollar denomination of some commodities.

4.Cut back on U.S. Treasury bonds and start using China's foreign exchange reserves to buy high-tech technology. With the depreciation of the US dollar, the foreign exchange reserves that we in China think we have in the hands of the United States have begun to become our own burdens or losses.

Who says it's useless? The monetary policy of the United States affects the RMB exchange rate, like he is out of monetary easing, the RMB will definitely appreciate, so that the Chinese market is not conducive to exports, good for imports, for the Chinese market, there is no doubt that imports are cheap, if the RMB is more and more valuable, it will inevitably lead to the flow of international hot money into China in various ways and means, especially the inflow, resulting in ****! **of** also leads to the price index**, so what is now ** is to raise the interest rate on bank reserves and raise interest rates several times a year to control ** and prices, make investment **unprofitable, and achieve the result of controlling prices!

Since the outbreak of the financial crisis in 2008, the United States has implemented rounds of quantitative easing, and the long-term benchmark interest rate has remained at a level close to zero, which has contributed a lot to the recovery of the US economy and shake off the shadow of the financial crisis. A weaker dollar is in the short- and long-term interests of the United States. Therefore, the United States has been reluctant to withdraw from the monetary policy of quantitative easing.

If the Fed is afraid of the emergence of financial bubbles and the overheating of the virtual economy and the potential for inflation, the Fed will do more harm than harm to China. One of China's biggest headaches at present is that the super monetary policy of multiple rounds of quantitative easing in the United States has greatly depreciated the trillion yuan of foreign exchange reserves as of the end of last year. If the U.S. quantitative easing policy is stopped, then the pressure to maintain value will be greatly eased.

This is one of the favorable factors.

China's price index climbed in April 2013, and there were signs of a new round of prices, one of the driving factors was imported inflation such as international commodities. The rise in international commodity prices has a lot to do with the depreciation of the US dollar due to the release of US dollars, because international commodities are measured and denominated in US dollars. If the US quantitative easing policy is stopped, the dollar will stop depreciating, and China's imported inflationary pressure will be greatly reduced.

This is the second positive factor.

The third favorable factor is that the pressure on RMB appreciation has been reduced, and the dilemma of monetary policy has become less difficult. At present, the continuous appreciation of the renminbi is passive, mainly due to the continuous depreciation of the US dollar.

If the U.S. quantitative easing policy is stopped, the dollar will stop depreciating, and the pressure on the renminbi will naturally decrease. In terms of stable growth, it will be of great benefit to the recovery of China's export economy and will bring substantial benefits to domestic export enterprises.

The two unfavorable factors are that after the Fed's quantitative easing exit, the appreciation of the US dollar will lead to the relative depreciation of the RMB, which may cause China's domestic hot money to retreat in a big way, and China should pay close attention to and prevent the impact it brings, which is one of them.

Second, the Chinese aunts who are crazy about buying ** have the greatest impact. The United States quantitative easing will gradually be withdrawn, the dollar will gradually strengthen, and the dollar-denominated ** will enter a medium and long-term downward channel, and even bring "catastrophe" to ***. This does not rule out the possibility that short-selling institutions such as Goldman Sachs and the Fed may join forces to calculate investors, including Chinese aunts.

Remind Chinese aunts and other investors who buy physical goods to pay close attention to the dynamic trend of the Federal Reserve's withdrawal from quantitative easing, prevent investment losses, and prevent being calculated by it.

The depreciation of the US dollar The US dollar is the main foreign exchange reserve of many countries, which is equivalent to the United States sucking the wealth of other countries.

The U.S. has implemented quantitative easing monetary policy, interest rates have remained low for a long time, and China is likely to follow the lead of the United States, and China's monetary policy should remain relatively loose in the near future, at least not tightening. Otherwise, the pressure of RMB appreciation will be greater, affecting exports and seriously impacting the domestic manufacturing industry. At this stage, China's real estate bubble and inflation are difficult to be serious, and have reached the extent that they must be managed, and the U.S. monetary policy will exacerbate the real estate bubble and China's inflation.

On the other hand, China is the largest creditor of the United States, and the United States has maintained a loose monetary policy for a long time, released liquidity, and increased the supply of dollars.