The RMB Appreciation Has Been In The "Chain Plan".

According to media reports in April 20th, Ms. Hu Xiaolian, deputy governor of the people's Bank of China, affirmed the issue.

In fact, Yi Gang, a vice president of the central bank, has also put forward such a view.

He believes that if RMB appreciation is not, the price rise in China will be much more serious from 2005 to 2008.

At least, the appreciation of RMB is 20%.

Indeed, the appreciation of the renminbi makes imports cheaper, which is beyond doubt.

However, this is a static point of view.

If we look at it from a dynamic perspective, the problem is much more complicated.

Let me give you an example.

From 2005 to 2008, oil prices rose from $50 a barrel to $148 a barrel, or nearly 300%.

At that time, the international public opinion believed that this was caused by "China's demand", and the most important reason was RMB appreciation. China's import demand increased by the appreciation of the renminbi. China's favorite purchase and most needed purchase was resources, so as long as "China's demand" is strong, the price of resources will rise, and oil will bear the brunt.

Once the appreciation of the renminbi becomes an excuse for international speculators to push up commodity prices, the higher the value of the renminbi, the higher the price of international commodities.

Therefore, attempting to stabilize imported inflation through currency appreciation is not only futile but costs more.

If the last round of oil price rises threatens the interests of the United States, the price of oil is likely to meet the expectations of Goldman Sachs and Morgan Stanley: up to $200 a barrel.

A 20% appreciation rate against the 100% price increase is not worth the candle.

Speaking of this, I recall the speech of US Treasury Secretary Geithner on the US Senate Finance Committee in February 16th this year.

He said: China's growing inflation pressure helps to enhance the competitiveness of the United States.

If China's inflation rate is much higher than that of the United States, the actual appreciation of the renminbi against the US dollar will be about 10% a year, and may be slightly higher.

If this rally continues, the competitive balance will shift significantly towards the direction of the United States.

Geithner believes that China has formed its own judgement that China will have no choice as time goes by except for the appreciation of the renminbi.

Because if we do not appreciate, the risk we may face may be higher inflation and greater possibility of China being involved in the financial crisis.

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This is very much like a "chain plan".

First, the stronger the renminbi, the easier it will be for China to fall into "

Second: the Chinese government, in order to curb the "China's demand theory", is bound to severely curb domestic demand. A series of tightening monetary conditions for this purpose can further boost the value of the renminbi and further push up the price of bulk commodities, making the cost of raw materials and financial costs of Chinese enterprises rise in turn.

What will happen in the end?

When China's economy is heading for recession because it is difficult to bear costs, the renminbi is

Luckily, there are others.

In April 18th, Stiglitz, the Nobel laureate and the big economist, cautioned China: "I am more worried about inflation than the government. I am more worried about the government's overreaction to inflation and making a lot of stupid decisions.

The reality is that the government's policy of dealing with inflation has led to rising labor, food and oil prices and inflation.

It is hoped that Chinese scholars and officials will understand Stiglitz's meaning.

In April 18th, the Bank of China International Financial Research Institute issued a special research report: because the economy is facing downside risks, prices are facing upward risks. This year, China has a big risk of stagflation.

Under such circumstances, it is very important to grasp the intensity, timing and rhythm of macro policies.

It is necessary to prevent the policy adjustment and control from being in place, fail to achieve the expected target of regulation and control, and prevent the "overshoot" of the policy, resulting in a "hard landing" of the economy.

From the present situation, we should guard against the latter.