With the closing of the annual IMF, G20 finance ministers and central bank governors of the opening of the exchange rate of the national competition intensified. Since September, countries have taken policy intervention rate, lowering the local currency interest rates. Japan, Brazil and India, connecting to purchase dollars and sell the currency the way, to prevent currency appreciation. Thailand, Colombia, Peru and other countries have intervened in the exchange rate. Among these, the two sides renewed the dispute over the renminbi, the U.S. House of Representatives passed a “currency reform to promote fair trade bill,” seeks “an undervalued exchange rate country” impose special tariffs. Japan, Brazil, India and other countries also carried out a series of RMB appreciation pressure on the global currency of war has slowly turned the big screen.

Since the financial crisis has more than two years, the global rescue from synergies, increased volatility into the exchange rate, which play a decisive role in the national recovery. Post-crisis period in the first round of stimulus, countries adopt looser monetary policy and fiscal policy, success in the short term to avoid the economy to recession. But from the second quarter of this year, the pace of economic recovery in countries around the world intensified differentiation: on the one hand, developed economies recovery is significantly reduced, the European countries in deep debt crisis, high unemployment rate in the European Union and the United States, the United States in September of unemployment rate was 9.6%, some analysts saying the actual unemployment rate has reached 20%; the other hand, accelerated the pace of recovery in emerging market countries, China, Brazil, Southeast Asia and other countries of strong economic growth. For the slow recovery in the United States on behalf of the state, Keynesian economic stimulus to do almost a deficit of fiscal stimulus can not be bound to continue, but no real improvement of the employment problem, placed in front of these countries, only the old mercantilist – The devaluation of the currency to stimulate exports and stimulate employment and economic growth.

With midterm elections approaching, the Obama administration on economic issues urgently need to be confessed, had to consider unconventional monetary policy. September 21, the Federal Reserve Open Market Committee (FOMC) kept the federal funds rate to make 0-0.25% unchanged position, while FOMC said that, if necessary, to provide additional easing to support the economy and improve the rate of inflation. The so-called “additional easing”, that is by sending U.S. dollars to buy Treasury bonds way down the long-term interest rates. Although not yet adopted, but the U.S. has openly show their responsibility to give up the possibility of a reserve currency. With the U.S. dollar this “anchor currency” of the drift, the global monetary system is doomed weight loss. Depreciation of the dollar, given the national currency down the “legitimacy.” When the base currency of the value of the deviation, the other measure of money lost, because the appreciation of national currencies, what is the national economy to the good, or due to depreciation of the dollar, no solution has become a proposition. The States bought U.S. dollars, throw the currency intervention, will intensify the turmoil in global currency markets. Historical experience shows that currency depreciation for the solution of deflation, to shift domestic economic difficulties did have some effect. During the Great Depression in the last century, competitive devaluation of national currencies, Britain announced in September 1931 to abandon the gold standard, a sharp depreciation of sterling, to save the British economy, but stick to the gold standard for a heavy blow to the country, especially for sterling as reserve currency countries, like France, the Netherlands, Belgium and other countries result in major economic losses, create a great deal of international disputes.

So, today is the most important thing is to let the U.S. off the “Pandora’s box”, to assume the responsibility of the reserve currency, or let the exchange rate countries to fight wars, trade protectionism will be rampant, the state continued to intensify the distrust between may eventually evolve into “reverse globalization” led to greater conflict. However, the U.S. old tricks, once again the RMB exchange rate and China-US trade relations and global imbalances linked to the domestic public and other countries in the transfer line of sight. Around RMB appreciation, there are many non-rational voice, there are many plausible analysis of the path, needs China strategy in international negotiations in the full response and clarification. Sino-US trade patterns is based on the two sides formed by factor endowments and can not be resolved through short-term yuan appreciation. Global imbalances are also same reason, then the key is to balance the surplus and deficit countries to adjust domestic economic structure, rather than short-term exchange rate movements. Of course, from improving global economic situation and their own economic interests, the RMB appreciation is a win-win option, but the extent and pace of appreciation of the principle of autonomy to continue to adhere to.

Behind the dispute in the exchange rate, we must also realize that the strength of China as the rise of economic power, and other countries to establish a new international monetary order and demand. October 9, IMF announced that it would raise concern about the stability of the global system, China has been included in five economies, the importance of system stability. This means that in the future among the international monetary system, the yuan will go reserve currency, and China’s economic trends will have a greater impact on the world. At present, there are still many problems and challenges in the economy, and in the international economy, China will carry more responsibility for a large country, and how to balance, which is in the growing Chinese economy faces a new homework. The just-concluded annual meeting of IMF which countries did not reach any agreement on the exchange rate, more suspense left was held in Seoul next month’s G20 summit. China’s global economic affairs, how to fight for their own interests and demands greater voice at the same time, to guide countries toward collaboration and consensus, should we look forward to.

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