RMB stability is the best choice for China's economy, the report suggests

Li Xingren in the second China-US Strategic and Economic Dialogue (s&ed), the Development Research Center of the State Council (hereinafter referred to as "the Institute") A recent research report suggested that China's economic operation is still in the long-term callback stage, the international economic recovery prospects are uncertain, maintain the basic stability of the RMB exchange rate,　　is the best choice to maintain stable growth of China and the world economy. The report is from the National Research Center "RMB exchange rate and economic growth" task group, the report author, national Research Center macroeconomic Research researcher Li Jianwei to the "First financial daily" reporter said that the current RMB exchange rate should not be under external pressure to make a substantial adjustment.　　The appreciation of RMB exchange rate will lead to the decline of China's export growth, since 2005, the main factor of the decline of China's export value is the real effective exchange rate of RMB continued appreciation. Since January 2008, the RMB Real effective exchange rate index has basically stabilized around 100, indicating that the RMB exchange rate is basically at a reasonable equilibrium exchange rate level. "Li Jianwei said.　　In his view, the appreciation of the renminbi will not lead to higher import growth in China, but will lead to a decline in import growth, and import growth rate is higher than the decline in export growth, because of China's import price elasticity is very low, the number of imports mainly depends on domestic economic growth. On the issue of RMB exchange rate, officials have repeatedly stressed on important occasions that China will maintain the renminbi exchange rate basically stable.　　From now on, the concern about RMB exchange rate is mainly focused on two aspects, one is worried that the appreciation of the renminbi will affect exports, on the other hand, fear of appreciation will lead to hot money inflow. The import and export data of April this year, issued by the National Customs General Administration, showed that exports were $119.92 billion in April, up 30.5% per cent.　　Although this growth rate is slightly stronger than previous market expectations, the market believes that the export situation may be reversed again in the second half of this year due to worries about the European debt problem. "At present, foreign trade policy is also facing inflection point, the original export-boosting policy or will gradually withdraw in the second half, if the renminbi back to appreciation channel in June, China's export downward pressure is increasing."　　"Liu Yuanchun, vice president of Renmin University of China, said in an interview with our correspondent recently. Li Jianwei also fears that a stronger renminbi could lead to a flood of "hot money". He believes that in the short term, appreciation of the exchange rate will increase the purchasing power of RMB in the international market, reduce the benefits of foreign capital inflow, increase the benefits of outflow, limit capital inflow and encourage capital outflow, but the continued appreciation of the renminbi and the resulting further appreciation expectation will increase the arbitrage chances of short-term speculative capital, Encourage the inflow of speculative capital and limit the outflow of domestic capital.　　The influx of short-term capital will not only increase the operation difficulty of domestic monetary policy, but also aggravate the bubble trend of domestic asset price. Pao Paoliang, deputy director of the National Center for Economic Forecasting, also holds a similar view. He believes that a short-term appreciation of the renminbi will affect the profits of many companies, making workers ' wages fall and further squeezing consumption, which will bring difficulties to economic recovery.。