China Has Been Affected By The "Currency War".

Recently, the BOJ announced the expansion of its monetary policy scale of quantitative and quantitative easing (QQE). Such sudden and vigorous measures are totally out of market expectations.

Once the easing news was released, the Nikkei index soared nearly 5%, and the dollar surged nearly 3% against the yen, which hit a new high in 2007.

"The impact of Japan's QQE increase on China will not be great, because there is no direct competition between the two countries' exports.

If Japan's economy improves, exports to China will help.

Because of the massive manufacturing shift, the further devaluation of the yen is not obvious for Japanese exports, so for now, the effect of the Bank of Japan's move is still uncertain.

Wang Tao, chief economist of UBS, said in an interview with reporters.

Since the advent of "Andouble economics" in 2012, the yen has been showing a downward trend.

Since the beginning of 2012, the US dollar has risen by about 47% against the yen, while the yuan has increased by more than 50% against the yen.

The Bank of Japan's unexpected increase in QQE will undoubtedly accelerate the depreciation of the yen.

At the time of press release, the US dollar continued to rise strongly against the yen, and market participants generally expected that the depreciation of the yen would continue for a long time.

The Bank of Paris, France (BNPPARIBAS) predicts that the target price of US dollar to Japanese yen will be 112 at the end of 2014; the target price in the first quarter of 2015 will be 115; at the end of 2015, it will reach 124..

As Japan's "neighbor", China will inevitably be affected by the depreciation of the yen.

Although China has now taken the place of Japan as the second largest economy in the world, Japan's share of global GDP is still 8%.

Craig Stephen, a famous American financial website MarketWatch columnist (CraigStephen), believes that China is facing the problem of hot money outflow and at the same time avoiding the impact of capital account liberalization.

Moreover, the RMB exchange rate has been pegged to the US dollar in a controlled manner, which has enlarged the impact of the depreciation of the yen on China.

China's central bank's recent figures show that China's foreign exchange reserve balance fell by $100 billion in the third quarter, the first decrease in nine quarters.

At the end of 9, the balance of foreign exchange reserves was US $3 trillion and 890 billion, down 100 billion US dollars compared with us $3 trillion and 990 billion at the end of the two quarter.

The last time the foreign exchange reserve fell quarterly, it was at the end of 6 in 2012.

Insiders pointed out that the Chinese authorities should pay close attention to any external shocks that may aggravate the trend of hot money outflow.

Stephen pointed out that the expansion of Japan's easing will, to a large extent, have an impact on China. If capital continues to flow, the Chinese authorities must decide whether to defend the exchange rate and tighten the money supply or allow the RMB exchange rate to fall.

But Guan Tao, director of the balance of Payments Division of the State Administration of foreign exchange, explained that the main reason for the decline of China's foreign exchange reserves in the three quarter was that the appreciation of the US dollar made the non dollar assets in China's foreign exchange reserves decrease when the amount was converted into us dollars.

"The scale of China's foreign exchange reserves has reached $3 trillion, and the fluctuation of foreign exchange reserves in major currencies in the future international market may also cause changes in the balance of foreign exchange reserves, but the impact is relatively limited. The exchange rate of major currencies is rising and falling. There is no need to overread the effect of such fluctuations."

"The decline in China's foreign exchange reserves reflects that China's balance of payments tends to balance, which is in line with the goal of national macroeconomic regulation and control.

With the decline in central bank intervention, the slowdown in foreign exchange reserve growth is a new normal.

The balance of payments provides space for China's monetary policy operation.

Although the Bank of Japan has stepped up its QQE efforts, the impact of China's hot money outflow is relatively limited. However, as one of the world's major exporters, the further weakening of the yen will increase the competition between China and Japan's export industry and cause widespread concern in the market.

HSBC's report shows that there is competition between China and Japan on the 19 manufacturing product lines, and this number is still growing.

Nevertheless, according to reporters, the depreciation of the yen will not have a significant impact on China's exports.

Wei Quanping, an associate professor at the Japan Research Center at Fudan University, told reporters that one of the important reasons for the depreciation of the Japanese yen will not increase the country's exports significantly.

Since the yen began to depreciate in September 2012, Japanese manufacturers have moved factories overseas to cut costs and wages, thus weakening the role of the yen's depreciation in promoting exports.

"Japan's export situation has changed dramatically compared with the 70s and 80s of last century.

The main problem now is that, on the one hand, the manufacturing industry is moving out. On the other hand, there are few new products launched by local enterprises supported by technological content, and the industry can not find new growth points.

In the cutting-edge technology, compared with the United States, the dominant industries are also impacted by South Korea and Taiwan, China.

Wei Quanping said.

The chief economist of the Asian Development Bank, Wei Shang, also pointed out to the newspaper reporters that as Japan's economy and the world economy's pnational industrial chains became more and more closely linked, and that the export involved more upstream and downstream industrial chains, Japan moved the upstream production of machinery and raw materials to the lower reaches (such as China and India). The appreciation of the renminbi partly offset the lifting effect of the depreciation of the yen on Japanese exports.

Although the BoJ unexpectedly expanded its QQE scale to the market, it announced Japan's determination to further strengthen its stimulus policies, but more and more analysts believe that the final result of Japan's "pre emptive action" is often "self defeating".

Insiders pointed out that what Japan really needs at present is structural reform including the political and financial fields, but this will undoubtedly affect the rights of vested interests. Therefore, the reform measures taken by the Bank of Japan will never touch the core issue.

According to the reporter, "improving the real economy is the top priority in boosting the Japanese economy. The key point of the Japanese economy is to find new industrial growth points." however, the three arrows of Andouble economics did not carry out thorough structural reform. The depreciation of the local currency and the increase of consumption tax should not be the main starting point of the policy, and the sustained easing policy will only sacrifice the welfare of the people.