Misplaced Yuan Worries

It's conventional wisdom that bipartisanship results in improved public policy. That this is not so is strikingly illustrated by a bill, supported by Democratic chairmen and ranking Republican members of the relevant committees in the Senate and House, that would punish China for its 'misaligned' currency (the yuan). Its mistaken premise is that this misalignment threatens our prosperity by causing America's large current account deficits with China.

In 2007, China's current account surplus -- the sum of its trade surplus, and net receipts from foreign assets and foreign remittances -- will be nearly 10% of its GDP, or about $300 billion. Two-thirds of this represents a bilateral surplus with the U.S. The U.S. global current account deficit in 2007 will be about $800 billion, nearly 6% of the U.S. GDP. Thus, China's bilateral current account surplus with the U.S. is one-quarter of the global U.S. deficit.

In 2005, the yuan was worth 12 U.S. cents. It is currently worth 13.5 cents. Many believe that if the yuan's exchange value were to increase further, perhaps to 17 cents or 18 cents, the bilateral imbalance between the two countries would be substantially reduced, if not eliminated. China's exports to the U.S. would thereby become more expensive in U.S. dollars and would therefore decrease, while China's imports from the U.S. would become less expensive in Chinese yuan and therefore would increase. If China fails to make this currency adjustment, the pending legislation in Congress would impose a tax on imports from China to offset the putative currency undervaluation.

This reasoning, though plausible, is wrong. A country's global current account deficit depends on the excess of its gross domestic investment over gross domestic savings. Gross savings in the U.S. are about 10%-12% of GDP, largely consisting of corporate depreciation allowances and retained corporate earnings. On the other hand, gross domestic investment is 16%-17% of GDP. The difference between the two comprises the U.S. current account deficit.

China's current account surplus is the mirror image of the U.S. imbalance. Gross investment in China is above 30% of its GDP, but its savings are even higher, above 40%.

While the appreciation of the yuan might initially raise U.S. exports to China and lower China's exports to the U.S., these effects would be small and transitory as long as the imbalances between savings and investment in the two economies persist. Japan and Germany -- two countries with perennial current account surpluses -- illustrate the point.

While Japan's yen has appreciated against the dollar in the past several years, its current account surplus is largely unchanged, because Japan's domestic savings have continued to exceed its domestic investment. The euro has appreciated 30% relative to the dollar, yet Germany maintains a large global current account surplus. That's because the German economy maintains an excess of savings over investment. (The economies of most other eurozone countries show a savings shortfall, and continue to incur current account deficits.)

In both Germany and Japan, the excess of domestic savings over domestic investment persists and hence their current account surpluses persist, notwithstanding their currencies' appreciation.

To reduce the bilateral imbalances between China and the U.S. requires more carefully crafted policies than revaluation of the yuan, else the results could be perverse. If correcting China's imbalance were sought by increasing gross domestic investment to match domestic savings, rampant inflation above the present 6.6% annual rate (already twice that of a year ago) could result -- because soaring demand for materials, plant and equipment would in the near term sharply boost their prices. This is a sequence China is already experiencing. If correcting the U.S. imbalance were sought by lowering investment to a level closer to the U.S. current savings rate, a serious recession would likely result.

Effective remedial policies for China lie in raising domestic consumption (reducing domestic savings) by 4% or 5% of GDP through such measures as wider dissemination of credit and debit cards and other consumer credit instruments. Remedial policies for the U.S. lie in raising current savings by 2% or 3% of U.S. GDP, through curbing government spending, instituting personal retirement accounts to supplement the defined benefits of Social Security, establishing a graduated consumption tax, or a combination of these measures.

In the U.S., such measures have been advocated by some members of both parties. But more important than their potential bipartisan support, they would warrant nonpartisan support because, unlike currency realignment, they would actually address the underlying sources of the U.S. and Chinese imbalances.

有一种传统观念认为，两党合作必然能使公共政策得到改善。而如今国会的一项议案却清楚地说明这种观念并非如此正确。这项得到美国参众两院各相关委员会民主党主席及共和党成员们共同支持的议案，将要求政府因人民币汇率的“偏差”制裁中国。提出该议案的理由是人民币汇率偏差导致美国出现巨额经常项目赤字、并进而威胁到美国经济的繁荣，而我要说的是，这一理由站不住脚。

中国2007年的经常项目盈余（经常项目盈余为贸易顺差、外国投资净收入和国外汇款净额的总和）约有3,000亿美元，接近同期国内生产总值(GDP)的10%。而中国的对美经常项目盈余大约为2.000亿美元。美国2007年的经常项目赤字将达8,000亿美元左右，接近美国GDP的6%。也就是说今年美国经常项目赤字的四分之一要算到中国头上。

在2005年时，1元人民币相当于12美分，而如今相当于13.5美分。许多人认为，如果人民币能进一步升值，达到17或18美分，那两国间经常项目的失衡即便不能完全消失，也会得到充分的缓解。届时中国输美商品的价格会更高，对美出口量将会随之减少，而美国对华出口会因为价格下跌的原因变得更多。若中国拒绝对汇率进行调整，按照这项仍待国会表决的议案，美国将会对进口自中国的商品加征关税，以抵消假想中人民币汇率低估的影响。

上述推理虽然貌似说得通，但却是错误的。一个国家的全球经常项目赤字，取决于其国内投资总额超过国内存款总额的多少。目前美国的国内存款总额约为GDP的10%至12%，基本上是由企业折旧备抵(depreciation allowance)和企业留存盈利构成。而国内投资总额则相当于GDP的16%至17%，两者之差便是美国的经常项目赤字。

中国的经常项目状况则与美国正好相反。其国内投资总额相当于GDP的30%以上，但存款则更高，在40%以上。

虽然人民币升值一开始的确有可能会增加美国的对华出口，并能抑制中国对美出口，但只要两国投资与存款间的失衡状态一直存在，那么人民币升值的效果不但有限而且持续时间也不会长。日本和德国这两个长期维持经常项目盈余的国家便很好体现了这一点。

以日本为例，日圆兑美元汇率过去数年一直在升值，但日本的经常项目盈余基本未变，原因正是日本国内的存款一直都超过其国内投资。再看看德国，欧元兑美元虽然升值了30%，但德国仍然维持着庞大的全球经常项目盈余，原因也是德国国内的存款一直都比投资多（欧元区其他国家大部分都因为存款不足而一直维持经常项目赤字）。

无论是德国还是日本，其国内存款一直都高于国内投资，因而无论货币如何升值经常项目都一直维持盈余状态。

要解决美中之间经常帐项目的失衡，需要更谨慎地制定政策，而不是靠人民币升值，否则会产生不当的后果。若中国想通过提升国内投资、缩小其与存款之间的差距来解决经常项目失衡，那急剧增加的原材料、工厂和设备需求会在短期内推动物价大幅上涨，进而导致其年通货膨胀率在目前6.6%（已经比上年高出一倍）的基础上进一步飙升。而如果要抑制美国的国内投资，让投资水平向存款水平靠拢，其结果可能是美国经济严重衰退。

在笔者看来，解决中国经常项目失衡的良方在于扩大信用卡、借记卡及其他消费信贷工具的发行范围，将国内消费占GDP的比重提高4到5个百分点（同时降低国内储蓄率）。至于美国，则要将国内存款占GDP的比重提高2到3个百分点。办法可以是削减政府开支，建立个人退休金帐户以作为法定社会保障制度的补充，以累进制方式征收消费税，抑或是综合运用以上措施。

在美国两党内部都已有人提倡采取上述措施。但比可能取得两党联手支持更重要的是，这些措施会确保超党派的支持，原因在于它们能从源头上解决美中经常项目的失衡，而不像人民币升值那样治标不治本。

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