Wu Jinglian: The Export Oriented Policy Bears Bitter Fruit &Nbsp; We Fall Into The Trap Of The US Dollar.

The key to reform is to achieve exchange rate The marketization of the formation mechanism. After the interest rates are generated, there will be no problems in the East Asian countries. Because the exchange rate stipulated in the local currency is very low, with the help of low factor prices and low value-added products. Exit It costs a lot of energy to catch up with resources and environment, but it doesn't get much benefits. Therefore, when the dollar reserves are accumulated, once the United States depreciates, the hard earned money will shrink.

　 Spamming Greenback Causing global flooding

The US economy has a very serious problem, and American economists have long realized that they have been chattering for at least ten years. The problem is that the US savings rate is very low, and Americans have a very high standard of living, but at the same time, the US economy maintains fairly high investment.

What is the problem? That is, the use of the US dollar as an international reserve currency. After the collapse of the Bretton Woods system, there was a very important consequence: the US dollar became the only world reserve currency. When the US dollar hits the ball and Clank, all countries in the world think it is real gold and silver, so there is a worldwide currency overflowing and liquidity overflow. It seems that money is everywhere, but this money is actually a piece of paper.

But for a developing country like ours, we have no ability to dominate the world economy, but we should seek for ourselves. In such a very complex economic environment, we should be very careful in making use of this environment to make us stronger. However, it is prudent to note that the economic system is risky and we should not let ourselves sink in.

In the end, we still got stuck in it. Why? Because we have a problem that has not been solved for a long time. It was first proposed by the Soviet Union in the late 60s of the last century. They call it the mode of economic growth and the international mode of economic growth. The problem is that the former Soviet socialist countries adopted the mode of economic growth adopted by the western developed countries in the early stage of industrialization. The characteristic of this economic growth mode is to drive and support economic growth by means of input of resources, especially capital investment. This is the so-called "general line of socialist industrialization" put forward by the Soviet Union, giving priority to the development of heavy industry. This set of things, the Soviet Union has suffered, we from the "95" began to propose to change the way of growth, but until now, the effect is not obvious.

Export oriented bitter pill

After the reform and opening up, we did not have such serious difficulties since 1958. Why? We use East Asia's approach to make up for its shortcomings, which is a government led export oriented policy. Take Japan as an example, Japan has made rapid economic growth in 50s by investing heavily in resources. Such a growth mode will definitely lead to an increasing investment rate and a continuous decrease in consumption rate. On the one hand, the income of workers has been raised very slowly. On the other hand, the lack of social demand has led to problems in economic operation. Since the beginning of Japan, many countries in East Asia have adopted a way to solve this problem, that is, export orientation. There are two main policy tools for export oriented, one is institutional protection, such as tariff, to protect the domestic market and curb imports. Another way is to lower the exchange rate of local currencies so as to promote exports and curb imports. After the reform and opening up, we successfully applied this policy. Especially in 1994, after China's reform of the foreign exchange system and the deep depreciation of the renminbi, it should be said that it has been very successful. With export oriented policy, we should compete to develop foreign exports and sell surplus and cheap labor on products.

However, East Asian countries and regions, without exception, have successfully implemented such policies after 10 or 20 years.

Taking advantage of the characteristics of the world economic structure, developing countries can use exports to compensate for domestic demand and support economic growth. However, after a period of economic development, there are problems and need further reform. The stories of Japan, Korea and other countries in Taiwan tell us that after undergoing further reforms, they can achieve transformation and get out of their predicament.

Then, where is the main point of reform? That is, the marketization of exchange rate formation mechanism. According to the demand and interest rate, there will not be any problems in the above-mentioned East Asian countries. This is the accumulation of foreign exchange reserves, the aggravation of trade frictions and the deterioration of terms of trade. Because the exchange rate of the local currency is very low, with the export of low factor prices and low value-added products, it costs a lot of energy to catch up with resources and environment, but it does not get much benefit. Things sell very cheaply and cheaply. So in the case of a large accumulation of US dollar reserves, once the United States is unable to bear it, the dollar will depreciate and the hard-earned money will shrink.

　 The main point of reform is to realize the marketization of exchange rate mechanism.

Therefore, we need to adjust and prevent this risk, but it is very difficult to move it because of the interest pattern that has been formed. As a result, they are unwilling to adjust, unwilling to reform the exchange rate formation system, and do not want to appreciate their currencies. The way in which the domestic currency is not appreciated is the intervention of the central bank in the market.

China's approach is intervened by the central bank's intervention in the market. The so-called market intervention is to acquire foreign exchange and suppress domestic currency. To do this, we are very happy with all aspects. The products of export enterprises are easy to go out, and the cost is low. But due to the massive release of money, by December 2006, our foreign exchange reserves reached US $1 trillion, the world's number one! Many people are very happy, but economists are very worried. Because this 1 trillion dollar is the central bank to produce 8 trillion of the central bank currency, the central bank currency in economics is called "high-energy currency", from the central bank to get a piece of money "high-energy currency", because of multiplier effect, in the domestic market will probably form 5 yuan of purchasing power. The purchasing power of 8 trillion of the central bank's currency was 40 trillion yuan, and 40 trillion of the money came out, which resulted in a flood of liquidity. Everyone is happy because of the overflow of liquidity, because everyone has money in his pocket, but after a while, only three possible results can be formed.

The first possibility is that asset prices such as stocks and real estate have skyrocketed. Everyone was very happy at this time. Everyone made money. But there is an obvious problem. There is no bubble in the world. The second possibility is consumer price inflation. The rise in consumer prices is generally longer than at least two years. There is another third possibility: asset bubbles and price rises are both at the same time. China's two years' problem is that the third possibility becomes a reality and the problem is concentrated.

So when we solve this problem, we can not talk about it, because the loan is not enough, so we can relax our money. The result of the relaxation of the money supply is that everyone is well off, but prices can't go down and assets will shrink accordingly. We have a problem now, because the price rises are too fierce. The consumer price index (CPI) rose more than 8% at the beginning of this year, which is a serious inflation in the world. How to do it? Control! But now there is a phenomenon that the producer price index (PPI) and CPI hang upside down, that is, the prices of industrial products, raw materials and raw materials are upside down with the price of the consumer market, PPI to more than 10%, CPI is down. Where is the empty space in the middle? At present, in the production enterprise, the profit space of the enterprise is compressed, and many enterprises can not stand it. Therefore, piecemeal attack is a matter of fact, headache, headache, it is difficult to fundamentally solve the problem.