RMB Exchange Rate Has Become A Scapegoat? Sino US Trade War Is On The Verge Of Fire.

In spite of opposition from all sides, the US Senate passed the 2011 currency exchange rate supervision reform act (hereinafter referred to as the "bill"), which is widely interpreted as an attempt to force the renminbi to accelerate appreciation. The Chinese foreign ministry, the Ministry of Commerce and the people's Bank of China immediately expressed their strong opposition to this.

Many analysts believe that the bill will be signed through the house of Representatives and signed by President Obama. Law The possibility is still low.

Analysts say the US move is mainly due to the populist needs of the upcoming elections, which not only detrimental to the trade balance of the two countries, but also may cause a "trade war" storm between the two most important economies in the world. The result will not only lead to a "two losers" situation, but also a risk of worsening the global economic recovery.

Have ulterior motives

The high-profile bill will manipulate the exchange rate and trade subsidies, and ask the US government to investigate whether the main trading partners are directly or indirectly reducing the value of their currencies and subsidizing their exports. According to the bill, once the exchange rate of major trading partners has been underestimated, the US government will include such acts in the scope of the so-called "countervailing" tariff. The "countervailing duty" is a kind of tax imposed by the US government on imported goods deemed to be subsidized by unfair government. Customs duties.

For the American politicians who are going to be elected in 13 months, the RMB exchange rate has become a scapegoat for the US economic problems in the face of the weak American economic recovery, the high unemployment rate and the negative emotions of the public at the moment.

In this regard, the central bank spokesman said that in recent years, China has accelerated the reform of the RMB exchange rate formation mechanism, and has achieved remarkable results. The RMB exchange rate is gradually becoming a reasonable and balanced level, and has also made important contributions to international economic and financial stability. The US Senate has repeatedly ignored the facts, entangled the issue of RMB exchange rate, sought external excuses for its own chronic diseases, and politicized economic issues. This will not only solve the domestic economic problems of the United States, but also seriously jeopardize Sino US economic and trade relations and damage the global economic recovery and steady growth.

The experts interviewed by our reporter also said that the proposed "drunken man's intention is not in liquor", mainly to divert people's dissatisfaction with the domestic economy of a "populist means", but it can not solve any problem in the United States. problem 。

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"This is just a way of populism, and it is useless." "Yes, there are serious problems in the global trade imbalance, especially between China and the United States," Anurag Gupta, director of the global risk society (GARP), President of the Cleveland regional branch, and Anurag Gupta, director of the master's degree program of Tongji West storage, said to our correspondent. There are also serious problems in the global economy, whether it is the fragile American economy or the eurozone crisis. But can such measures taken by the United States help solve these problems? The answer is never. "

"The US move mainly takes into account the electoral factors, coupled with the need for populism in the US after the crisis. But the exchange rate problem can not help the United States. The United States needs the return of the real industry and the new growth point. " Shao Yu, chief strategist of Oriental Securities Research Institute, told our reporter.

In fact, there is no obvious correlation between the unemployment rate and trade balance in the United States and the RMB exchange rate itself. Data show that since the reform of China's RMB exchange rate formation mechanism in 2005, the RMB has appreciated by 30% against the US dollar, while the US unemployment rate has risen from 7% to over 9%. In addition, between 2007 and 2009, international trade in the United States contracted by 12%, and the trade deficit dropped from 655 billion US dollars in 2007 to US $363 billion in 2009. Meanwhile, the United States increased about 6000000 of its unemployed.

Experts point out that there are many reasons for the current global imbalance. The main reason for the trade imbalance between China and the United States is not the RMB exchange rate, the structure of Sino US investment and trade is different, the savings rate and consumption rate between China and the US are different, the division of labor between different countries in the industrial chain formed by economic globalization, and the unreasonable international monetary system may be more important than exchange rate.

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　 The bill finally becomes a huge obstacle to the law.

Analysts believe that the possibility of the current version of the bill passed by the house of Representatives and ultimately signed by Obama as a law is still low, because the US government has great concerns about the two sides' trade wars and exchange rate wars.

"Many people believe that it can not be passed in the house of Representatives and the White House. President Obama has made some suggestive statements. So it seems unlikely that this bill will eventually become law. " Anurag Gupta told our reporter.

In fact, although President Obama accused China of manipulating the RMB exchange rate last week and used the trading system to gain its advantage, he has hinted that he is scruples about the bill.

Obama said at a press conference at the White House last Thursday: "what I am most concerned about is that whatever legal tools we pass, we must ensure that these tools can actually work and ensure that they are consistent with the international treaties and international obligations we have signed." Obama said: "I do not hope that the bill passed by us is only symbolic, knowing that the bill may not get the support of the WTO."

Obama did not make it clear whether he would veto the Congressional push for the renminbi exchange rate bill.

At the same time, the result of the vote may also be blocked by the house of Representatives. Republican leaders in the house of representatives have always called the bill "very dangerous" and have so far refused to set a date for the vote.

Bona, the speaker of the house of Representatives, said on Thursday that if Congress passes the renminbi exchange rate bill, it will be "wrong and dangerous" and may trigger a trade war. He insisted that he would withstand the pressure to ask the house of representatives to vote.

Boehner pointed out that it is necessary to cooperate with China to make a correct pricing of the renminbi. Legislation is not an appropriate way. Boehner said he believed President Obama would also oppose the RMB exchange rate bill.

But according to the Financial Times quoted by trade experts, a certain version of the bill has a considerable chance to pass, perhaps at the beginning of next year.

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Trade wars will lead to "two wars".

Then, what consequences will this bill become if it becomes law eventually?

Cui Tiankai, Vice Foreign Minister of China, warned on Monday that the only consequence of making such a bill a law would be a trade war between China and the United States, which would be a result of two losers. It is not conducive to the development of Sino US economic and trade relations, and is not conducive to the recovery of the US economy and the increase in the industry, to the growth of the world economy, but also to the overall development of Sino US relations.

Cui Tiankai also stressed that the bill not only failed to reflect the realities of Sino US economic and trade relations, but also would bring harmful factors to the future development of bilateral economic and trade relations.

Earlier, the people's Bank of China, China's Ministry of Commerce and the Chinese foreign ministry accused the United States of politicizing the exchange rate and placing the global economy at risk of trade war.

Jon Huntsman, the former US presidential candidate and former ambassador to China, also said he opposed the imposition of punitive tariffs to China on the grounds of so-called manipulation of the exchange rate. Punitive tariffs will be a harmful practice in practice and may lead to trade wars. On the relationship between the two largest economies in the world, the most reluctant thing for both China and the us to see is the outbreak of trade war, especially in the face of economic recession in the United States.

History has already shown that trade wars will not only lead to "two wars," but will also exacerbate the fragile global economy.

Lieberman, a Connecticut senator and independant, said on Tuesday that he was worried that the two countries might be involved in a "two losed trade war".

In fact, hours before the US Senate vote, the Xinhua News Agency warned in a commentary that the proposed legislation in the US is reminiscent of the "Hawley Tariff Act" which was introduced in 1930, which aggravated the great depression.

In the Great Depression of the 30s of last century, President Hoover, in spite of the strong opposition of the political and economic circles, signed the "smoot Hawley act" which passed the Congress in June 1930. The bill was held by economists as the trigger of the "global depression of 1929~1933". The signing of the bill immediately triggered a global trade war. Following the collapse of the stock market in 1929, the United States and the world trade were in serious decline, accompanied by the great depression.