Machellenach condition does not support RMB appreciation

Bai, vice director of international market Research, Department of Trade and Economic Cooperation, Ministry of Commerce, China (Hubei Daily) The issue of RMB exchange rate has been a "wedge" hindering the development of Sino-US economic and trade relations for a long time. From this year's point of view, the United States on the renminbi exchange rate on China's pressure is gradually increasing weight. On September 16, 2010, U.S. Treasury Secretary Timothy Geithner said the renminbi's appreciation was too slow and the value of the revaluation was very limited.　　He stressed that the Chinese government would be urged to allow rapid, meaningful and sustained appreciation of the renminbi through bilateral and multilateral channels. Why is America so keen to pressure the renminbi to appreciate? Views vary, but at this stage the United States is facing a further decline in economic growth and increased employment pressure, indicating that the United States is trying to increase the competitiveness of U.S. products in the international market by pressure, improve the balance of trade imbalance.　　But can a stronger renminbi fundamentally improve America's excessive trade deficit? To a large extent, the Marshall-Lerner condition can reveal the relationship between the devaluation of a country's currency and the extent to which it has improved its trade balance. The so-called Marshall-Lerner conditions, that is, with Dx and Dm respectively to the devaluation of the country's exports of goods demand elasticity and devaluation of the country's import demand elasticity, when |dx|+|dm|>1, that is, export demand elasticity and import demand elasticity of absolute value and greater than 1 o'clock, the devaluation of local currency is conducive to improving the state If the |dx|+|dm|<1, that is, export demand elasticity and the absolute value of the elasticity of import demand is less than 1 o'clock, the devaluation of the local currency will easily worsen the trade balance of the country; if |dx|+|dm|=1, i.e. export demand elasticity and the absolute value of elasticity of import demand is equal to 1 o'clock, The depreciation of the local currency has no effect on the balance of payments.　　In this sense, if the United States oppression of the renminbi revaluation, it must be |dx|+|dm| bigger, only to reduce the U.S. trade deficit can play a role. Now the situation is, whether it is big |dm| or big |dx|, can not see the United States has a big act. On the one hand, the fundamental starting point of the big |dm| is to restrict imports of goods from China. It is noteworthy that the U.S. imports of Chinese products are mostly textiles and clothing, light industrial products, household appliances and other necessities of life and steel and other intermediate products, the United States of America's own economic structure does not have the capacity to produce these products, even if the United States to reduce imports of China's such products, but also imports from other countries, will also create a trade deficit. Meanwhile, in curbing imports from China, the United States has also made a lot of efforts, in addition to the "two anti-one" aspect of the efforts, the U.S. Congress passed earlier last year, the "use of American provisions", has long been a part of China's import demand to block outside the United States, there is no need to rely on oppression of the renminbi　　Therefore, under the existing factor endowment, the United States to use the renminbi revaluation to curb imports, basically no. On the other hand, the fundamental starting point of enlarging the |dx| is to enlarge America'sThe scale of export trade in China. However, the U.S. factor endowment is mainly concentrated in High-tech resources, China needs to import a large number of High-tech products to make up for its own short board, and the United States is precisely the export of High-tech products look very tight. For a long time to come, China's biggest import demand comes from commodities such as oil, iron ore, non-ferrous metals and coal, which the United States either cannot get or is China's competitor in the international market. The US always wants China to buy more agricultural produce from the US to make up for its trade deficit with China. However, as a big agricultural country, China also attaches great importance to the three agricultural issues and cannot sacrifice the interests of Chinese farmers just to satisfy the interests of American farmers.　　In this way, even if the renminbi appreciates, the U.S. exports to China will not increase. It is clear that by not meeting the Marshall-Lerner condition, America's oppression of the renminbi would make it hard to reduce the U.S. trade deficit and expand domestic employment in the United States. As the world's largest developing country and the largest developed country, the trade between the two countries is highly complementary, the United States does not fully understand this. Data show that more than 70% of the United States is a service sector, while China's exports to the United States are mainly manufacturing, the appreciation of the renminbi is not conducive to the U.S. unemployment problem.　　Even from the existing manufacturing industry in the United States, because of high wages, high welfare of the social status quo, the United States has no ability to produce some products, the appreciation of the renminbi can not give the United States related industries more room for growth. So far, the U.S. government has set many hurdles for Chinese products to enter the US market. This year, for example, the United States has to import from China's metal silicon to make anti-dumping final, to China's textile electric blanket, narrow ribbon, seamless steel pipe, coated paper, etc. to make anti-dumping, countervailing or "double counter" the first cut, and the import of drilling pipe from China launched a "double reverse" investigation. It is not difficult to see that in the implementation of trade protection, the United States has been used skills, but this series of actions only achieved a local effect.　　In the absence of new excuses, the United States simply pressured the yuan to appreciate and make no difference in the way Chinese products enter the US market. In recent years, the United States on the issue of renminbi appreciation of the pressure on the light, but it is undeniable that whenever a critical time period, the renminbi exchange rate is also relatively "occasional", within the normal range of response. This time nature is no exception. According to the latest data from China's foreign exchange trading Center, September 16, the median price of the renminbi against the U.S. dollar 6.7181, higher than the previous session of 69 basis points. At this point, the renminbi against the U.S. dollar exchange rate has been five consecutive trading days since the new record.　　On the American side, however, it seems to disagree with the small appreciation that falls within the normal range of fluctuations. In fact, even Geithner himself does not think that a revaluation of the renminbi would have the effect of "a litre of the spirit" in improving America's trade balance. In testimony to Congress, Geithner also admitted that a stronger renminbi would not erase the US global trade deficit and the U.S.-China deficit. He also stressed the importance of the United States to practice "internal strength"Of。 It now seems that the politicians of the United States, whether they are fully rational or not, have a preference for pleasing voters. In this sense, forcing the renminbi to appreciate is only a matter of politicization, and in the event that the Marshall-Lerner condition is not met, the US will have no chance of trying to compress its foreign trade deficit by oppressing its currency.