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Why did China and Japan lend a lot of money to the United States and Europe?
The twin engines of China and America drive the world economy.
At present, the global economy is divided into three camps: the affluent consumption camp represented by Britain, America, Europe and Japan, the cheap labor camp represented by China, India and Southeast Asia, and the raw material camp represented by Australia, Africa, Russia and Latin America. (Xie Guozhong, 2005) and the three camps are mainly driven by the two engines of the United States and China. Americans and China people are optimistic. No matter how much money you give to either party, it will be spent. Americans tend to spend-baby boomers are inexplicably keen on spending. China tends to invest-China people have always been poor and need to accumulate wealth. With its financial hegemony, the United States has created a large demand for dollar assets in the international financial field. The United States attracts international capital to buy its national debt, and foreign investors need not worry about the solvency of the United States. China's banking system quickly transformed the income of the export industry into investment, creating the impetus for importing equipment and raw materials. In order to maintain social stability, China needs to create as many employment opportunities as possible. The state-owned banking system is a tool for China government departments to transfer export income to investment fields to create as many employment opportunities as possible.
In the European and American consumption camp with the United States as the core, the strong consumption capacity of the United States has prevented the global economy from sliding into deflation, the huge import market has created more demand, and the huge trade deficit has continuously injected liquidity into the world economy. China's state-owned banking system can quickly convert export income and "hot money" into fixed assets investment. The sharp increase in investment in fixed assets has led to an increase in the import of equipment and raw materials. The former is beneficial to old industrialized countries such as Germany and Japan, while the latter increases the demand and price of raw materials. Thus, when the Federal Reserve created liquidity to stimulate American consumption, China promoted the economic growth of equipment manufacturers (the United States, Japan and Germany) and raw material exporting countries (Australia, Brazil and South Africa) through imports, which played a multiplier effect. In the process of promoting global economic growth, China and the United States are in perfect harmony.
It is worth emphasizing that the horsepower of China engine is constantly increasing. At the end of 1970s, the biggest change in the global economy was China's reform and opening up, which made China people, who accounted for one fifth of the global population, enter the global trading system. With abundant labor resources, China has gradually formed an Asian industrial chain. Chinese mainland, Taiwan Province Province and South Korea are responsible for design, investment, manufacturing and marketing, while mainlanders are responsible for production. This is the so-called "smile curve" China is at the low end of the smile curve, with the lowest income. However, Chinese mainland directly faces the markets of the United States and western powers, and it suffers the most accusations, attacks and retaliation. Japanese, Korean, China and Taiwan Province provinces, which have gained huge benefits, are all hiding behind. In any case, China's economy has gained its due position, and China is a huge engine of Asian economic development, growing together with the whole Asian economy. With the economic growth, China's domestic demand is also expanding rapidly, and the import demand is increasing. At the end of 1980s, Asian exports to the United States and intra-Asian trade accounted for 25% of the total foreign trade of Asian countries respectively. But now, intra-Asian trade has accounted for 40% of Asia's total foreign trade, while exports to the United States have dropped to about 20%. In terms of processing and manufacturing, Asian countries often complain about China and feel that China dominates the production, processing and transportation of labor-intensive industries. However, in the agricultural trade of raw materials, energy and food, what China needs is what some Asian countries are rich in. For example, Indonesian rubber, oil and timber owners are very happy to see China's large imports. China's imports from Asian countries increased the bilateral trade volume, and China bought about 65,438+05% of Asian exports. In addition, China has gradually changed from a contributor to an absorber in bilateral trade, absorbing the resources of Asian countries, making most Asian countries more and more dependent on China in trade and economy.
The driving force for the sustained growth of the American economy first comes from the government's tax reduction measures. The core of President Bush's second term economic policy is still tax reduction. Tax reduction can increase consumers' income and stimulate the growth of consumer spending. In addition, Bush also signed a new corporate tax reduction bill, which plans to reduce taxes for American companies and farms by $654.38+03.6 billion in the next 654.38+00 years, from which many enterprises can benefit. Second, low interest rates will continue to stimulate economic growth. Although the US federal funds rate, that is, the overnight lending rate between commercial banks, has been raised to 3.25%, the market estimates that the "neutral" level of the US federal funds rate is 5% to 6%, and the current interest rate level still has a considerable stimulating effect on the growth of personal consumption (especially housing consumption) and corporate investment.
The increase in the US trade deficit is partly due to the rise in oil prices. The United States is the largest oil importer in the world, and the burden of rising oil prices is directly or indirectly borne by the United States. High oil prices bring about $300 billion in revenue to oil exporting countries every year, which greatly stimulates consumption. Luxury real estate projects in the Gulf are examples. In addition, the loose monetary policy maintained by the United States will inevitably lead to the revaluation of financial assets, such as the appreciation of real estate, bonds and stocks, which will drive consumption, cause a trade deficit and stimulate the growth of "hot money". The "hot money" in the hands of speculators impacts the global economy through hedge funds, authorized traders of international financial institutions and private banks looking for income. The Federal Reserve injected too much money into the global economy. Since June 2004, the Federal Reserve has been raising interest rates in accordance with the rhythm of "gradualism". The Fed is afraid that raising interest rates too quickly will scare speculators and cause a global economic depression. The Fed has repeatedly hinted that it will raise interest rates "slowly and rhythmically" to encourage speculators to quit completely.
Ge Lao's bubble game and many themes of China have worked.
If Federal Reserve Chairman Ben alan greenspan has any magic power, it is that he has an extraordinary ability to play with asset bubbles. In the past, Greenspan's bubble game worked many times in his career as a central bank close to 19. The free flow of capital has reserved a huge space for a skilled central bank governor like Greenspan to operate flexibly. Xie Guozhong pointed out that when the technology bubble began to burst, the financial market did expect a worse situation. From the traditional point of view, the technology bubble is the biggest economic bubble in the world since the1968+20s, and such a big bubble should lead to a big economic recession. Surprisingly, neither the United States nor the global economy has fallen into a series of major recessions. 200 1, the American economy grew by 0.75% and consumption increased by 2.5%. In the previous two recessions, 199 1 year, American personal consumption decreased to only 0. 17%, and 1980, American personal consumption decreased by 0.28%. However, after the technology bubble, the growth of the global economy almost never stopped until the global economy reached a high point in 2003 and 2004. 2004 is the fastest year of global economic growth in the past two decades. Thanks to Greenspan of the Federal Reserve, he quickly and drastically lowered interest rates. Before Nasdaq's speculative enthusiasm collapsed, the Federal Reserve led it into the real estate industry. The rise in real estate prices has increased the wealth of American families, far exceeding the losses caused by the collapse of the Nasdaq market. Therefore, American family wealth did not feel the pain caused by the stock market decline. At the same time, because the Federal Reserve lowered interest rates, Americans can borrow more money to support consumption, which is of course another important evidence that Ge Lao is playing with bubbles. Since the systematic overheating of the American economy in 2000, the Federal Reserve has created a large number of excess capital flows. Americans borrow money for consumption, while China borrows money for investment. Consumers in the United States and investors in China are driving the global economic growth, while the Federal Reserve keeps increasing fuel-dollars-as the liquidity of the global economy. The spillover effect of this growth mode is mainly realized through China. When Americans spend money by borrowing, the money flows to China through China's booming exports, and the money enters the banking system in China, and then automatically flows into the hands of state-owned enterprises or real estate developers in China. The strong growth of investment in China has created a huge demand for raw materials and equipment. These funds flow to countries such as Japan and Saudi Arabia. Japan and Saudi Arabia have no effective investment channels at home, so they invest their money in the United States and buy US Treasury bonds. If the trade deficit of the United States decreases, the investment growth rate of China will also decrease.
For China, China's good investment environment, industrial supporting level and low-cost labor constantly attract a large number of foreign capital inflows, accelerating the transfer of global manufacturing to China. This trend has not changed because of some short-term factors. China has also issued a series of policies to encourage foreign investors to actively participate in the restructuring of state-owned enterprises, and to allow foreign investors to substantially participate in the restructuring of state-owned enterprises in the form of capital or technology participation or even holding. It has been more than four years since China joined the WTO, and the further opening of banking, insurance and retail has provided an open and orderly environment for cross-border mergers and acquisitions. Since 2005, China has entered the late transition period, and its tariff and market access threshold have been greatly reduced. China will gradually realize the promised market opening in nine industries and more than 90 sub-industries, including commerce, transportation, finance and tourism. In 2005, the overall tariff will be further reduced to10.1%; The average tariff of industrial products will be reduced to 9.3%; Further reduce automobile tariffs and cancel automobile import quotas; Implement zero tariffs on information technology products and cancel all information technology product quotas; China will allow foreign investors to set up joint ventures in domestic and international basic telecommunications services, with a foreign share of 25%. In addition, the reform of RMB exchange rate system is in full swing, and foreign capital has been paying close attention to this important measure.
Twin engines also face their own internal contradictions.
The problem of economic imbalance is a big problem that puzzles economic leaders all over the world at present. The United States has accumulated a huge fiscal deficit, and the trade deficit is also increasing year by year. However, East Asian countries have accumulated a lot of foreign exchange reserves and creditor's rights. Both coexist, just like an active volcano, which may erupt at any time. By then, the whole international financial system will be affected. The rapid growth of GDP is almost synchronized with the deterioration of financial situation. Despite the weakness of the US dollar, the US trade deficit has increased by 13.5%, accounting for a record 5.2% of its GDP. 200 1 By 2004, China's fixed investment doubled, sowing the seeds of overcapacity, and China's banking system always seemed to be hit by bad debts.
The core mechanism of China-US dual engine driving global economic growth is: the credibility of US Treasury bonds (because the ultimate tool for wealth storage is US Treasury bonds) and the willingness of China's banking system to take risks. The by-products of this growth model are: the trade deficit of the United States and the bad debts of China's banking system. As long as global investors are not worried about the solvency of the United States and the people of China believe that the solvency of China's banking system is fine, the current economic game can continue. However, we should also realize that this growth model has two main limitations: first, the available natural resources. When natural resources are in short supply, liquidity will enter this sector, which will lead to rising natural resource prices and cost-driven inflation. Second, there is an upper limit to the global demand for dollar assets. When the trade deficit in the United States scares investors, it will inevitably lead to an increase in the cost of capital in the United States-an increase in long-term interest rates, which will eventually lead to a slowdown in global economic growth.
The Federal Reserve is the real central bank of the global economy, and other central banks can only affect the liquidity of their domestic markets by increasing and decreasing foreign exchange reserves. The Federal Reserve has the privilege of issuing unlimited amounts of money. While providing a lot of liquidity, it also planted a time bomb of global inflation. However, Mr. Greenspan is used to prolonging the duration of the bubble and seeking additional benefits for the American economy. The Fed's policy has excessively stimulated the asset market-it has been manifested as the wealth effect of the stock market and the real estate market, which has stimulated the demand of the United States and caused a huge trade deficit in the United States; There is an investment bubble in China, which also leads to natural resource inflation.
American economic prosperity is based on "borrowed money and borrowed time". Therefore, whether the US economy can continue to grow steadily depends largely on whether the central banks of China, Southeast Asia, Japan, European countries and other countries and regions are willing to continue lending money to Americans by purchasing US assets (such as US Treasury bonds). Due to the special importance of the US dollar as the world currency, the long-term "double high" deficit in the United States has not brought much trouble to the economy, and its large-scale import has played a very positive role in the development of the world economy. But it is precisely because of this that this interdependent relationship between the United States and other countries is difficult to maintain for a long time. If the long-term accumulated risks are released in the chain break of a commodity, market and capital, its impact will also be enormous. If the United States does not make major policy adjustments, the financial situation of the United States will be difficult to improve in the short term. The deteriorating financial situation in the United States is bound to endanger the stable growth of the global economy. Americans give the world the impression that they eat more and occupy more, because this is achieved by virtue of the hegemonic position of the dollar. But America's trade deficit can never be sustained. For the United States, it is the most flexible and fastest-adjusting economic entity in the world, and its market is full of vitality. Trade with the United States is very important for those countries that have newly joined the world economy. In contrast, the economic elasticity of Europe and Japan is much worse than that of the United States, which makes the United States undertake the task of creating market demand. However, seemingly peaceful coexistence has encouraged American indulgence. Now, the trade deficit of the United States has reached 600 billion dollars per year, which is enough to scare American economists and policy makers.
In the current global economy, inflation is no longer a major problem, because the demand of OECD economies will automatically trigger the supply of emerging economies. However, it is easy to produce asset bubbles, because asset bubbles temporarily digest inflation-excess liquidity will find a way out in the asset market. For example, 1997- 1998 Since the Southeast Asian financial crisis, the global economy has been immersed in excessive liquidity-now the global economy is suspended above the liquidity bubble. After the bursting of the technology bubble in 2000, the Federal Reserve cut interest rates to avoid economic recession, which is the main reason for the flood of liquidity.
At present, a key issue is that China's investment frenzy will never last. China has been targeted by developed countries, and there are more and more cases in which China is accused of dumping, and it is under siege. In addition, the RMB is under the dual pressure of major governments and international hot money appreciation expectations. The corresponding excessive foreign exchange accounts seriously restrict monetary policy, and long-term inflation expectations begin to rise. China's demand for energy and raw materials has greatly increased, and its imports have shown a rapid growth trend. The impact of high product prices in the international market on domestic prices will be enhanced. The rising price of raw materials will increase the cost of production enterprises, reduce the profit margin and produce cost-driven inflation, which is also not conducive to the improvement of China's export competitiveness. China's fixed investment may exceed half of this year's GDP, and the profits used to maintain investment prosperity come from the soaring real estate industry to some extent. According to speculators' speculation, when all the real estate projects under construction are completed, the sales of the real estate industry will account for one-third of the gross national product according to the current housing prices in major cities in China. However, the huge number of houses sold now actually overdraws the market demand of the real estate industry in the future. (Xie Guozhong, 2005) The residents of China city were frightened by the rising house prices in recent years. Many people decide to budget in advance and buy a house in advance. In a few years, people's demand for houses will be greatly reduced.
Noisy international society
When domestic problems cannot be solved, it is a common trick of some countries to accuse other countries of problems and force them to take measures in an attempt to cover up their own economic and financial problems, especially the United States. Over the past three years, some American officials have not stopped criticizing China's fixed exchange rate mechanism, arguing that China's fixed exchange rate mechanism is the chief culprit in the world economy today. They believe that in order to halve the current account deficit of the United States within two years, that is, from 6% to 3% of the gross domestic product (GDP), the trade-weighted average exchange rate of Asian currencies needs to appreciate by 18%, and the RMB will bear the brunt. To eliminate global imbalances, Asian currencies need to appreciate more (35%), and non-Asian major currencies, including pound and euro, also need to appreciate 10% to 20%.
Many American officials believe that China's sharp appreciation of the renminbi can complete the adjustment that the United States can only achieve through economic recession. This idea is naive. If the appreciation of China's RMB is large enough, it will have a great impact on the US economy, leading to hot money leaving China and a hard landing of China's economy, which will put greater pressure on the US economy. If China allows the RMB to appreciate slightly, it will not solve any problems, and it may also lead to more speculative capital flowing to China.
In the past few years, the monetary and fiscal policies in the United States have been extremely loose, which may have a much greater impact on the process of aggravating the problem than the exchange rate system of RMB pegged to the US dollar. Low interest rates lead to rising house prices, which are more and more speculative, and also lead to low personal savings level and widening current account deficit. In creating employment opportunities, the Fed should promote greater flexibility in the labor market, instead of focusing on macro-stimulating more employment opportunities. In today's global economy, trying to use monetary policy to achieve full employment is tantamount to self-destruction. Xie Guozhong believes that the United States needs an economic recession, which is a necessary stage to clean up the bubble generated during the economic boom.
Abolishing dollar hegemony is the key to solving the problem.
What is the solution to the global economic imbalance? Ten people may give ten answers. Realizing "eat more and occupy more" under the protection of dollar hegemony-thus creating demand and stimulating world economic growth-will eventually encounter a problem, the collapse of the dollar. The collapse of the dollar means the end of the hegemony of the dollar, and it also means that the demand created by the United States has fallen sharply. This may be the best way to end the current account deficit in the United States. The euro was once regarded by market participants as a currency that challenged the hegemony of the dollar, which is not wrong. However, due to the limited market demand involved in the euro and the complicated political, economic and diplomatic relations in the euro zone, the euro has not fundamentally shaken the hegemonic position of the dollar. The author believes that when the RMB comes out, only by combining the RMB with the euro can we get rid of the hegemony of the US dollar. Let it be on an equal footing with the euro and RMB, and the three major currencies * * * will be used as international currencies.
The problem is that, for the sake of interests, convenience and habits, the United States will not automatically withdraw from the stage of dollar hegemony, and China is extremely reluctant to rush the RMB to the international financial stage before its financial system is sound. Therefore, the two sides continue to give full play to their existing advantages, and the imbalance of the world economy is becoming more and more serious.
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