Economics

Čína tváří v tvář trhu

Sep 4, 2015 Jeffrey Frankel

CAMBRIDGE – Na současné ekonomické těžkosti Číny se pohlíží jedinou optikou: neschopností vlády nechat působit trh. Tato perspektiva ale zahraniční pozorovatele přivádí k chybné interpretaci nejdůležitějších letošních událostí na devizových a akciových trzích.

Jistěže, čínské úřady různými způsoby silně intervenují. V letech 2004 až 2013 Čínská lidová banka (ČLB) nakoupila devizové rezervy v hodnotě bilionů dolarů, čímž zabránila tomu, aby žen-min-pi zhodnocovalo tak silně, jako kdyby volně plovalo. V poslední době úřady nasadily veškeré politické dělostřelectvo, které dokázaly povolat, v marné snaze zmírnit propad cen akcií během letošního léta.

Některé významné události, jež cizinci pranýřují jako důsledek vládních intervencí, jsou však ve skutečnosti opakem. Hlavním předmětem doličným je devalvace žen-min-pi vůči dolaru, k níž došlo 11. srpna – posun, který americkým politikům připomněl staré moudro: „Kroť svá přání opatrností.“ Devalvací – o pouhá 3 %, je třeba poznamenat – se projevila změna v politice ČLB, jejímž cílem je dát trhu větší vliv na směnný kurz. Dříve ČLB dovolovala hodnotě žen-min-pi kolísat každý den v 2% pásmu, ale zpravidla neumožňovala, aby se výchylky ze dne na den sčítaly. Teď závěrečný kurz každého dne ovlivní kurz dne příštího, což přináší korekce směrem k tržním hladinám.

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0 Comments on this paragraph, 7 Comments on this article

Venkatraman Anantha Nageswaran Sep 16, 2015

Very strange and unconvincing set of arguments from Prof. Frankel. Wonder how someone like him would evaluate a student paper that advanced such specious and empirically unverified arguments? What about the arrests, searches, complete ban on short sales, patriotic songs in business schools on the stock market, etc.,? Post-2 PM surge in the stock markets? May be, in America, these days, these actions are labelled as 'market responsive' steps.

After all, they banned short sales on banking stocks, suspended mark-to-market accounting in banks (it still remains) and the Fed bought all kinds of assets until recently.

So, whatever one does to prevent the market from going in the direction policymakers do not want it to go is 'fair game', I suppose.

Writing in this site, Stephen Roach wrote that the more policymakers rely on asset markets to deliver on their policy goals, the less they hesitate to distort it. I have paraphrased him.

Perhaps, China is the most egregious example of it. Or, may be, there are other contenders in the advanced world. But, it is a race to the bottom and China is very much in contention to take the top honours.

Are intellectuals with agendas more dangerous to the Society than governments and politicians with agendas?
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Jeffrey Frankel Sep 10, 2015

To: M A J Jeyaseelan
You say "The emerging economies owe their recent success more to their regulatory frameworks than anything else." As I hope my columns make clear, I agree that some counter-cyclical macro-prudential regulatory actions by China and other emerging governments deserve far more recognition than they have received from western market-touting commentators. However, I believe you go to far. Needless to say, when China was governed entirely by Maoist regulation, it did poorly; its spectacular economic success over the last 3 or 4 decades would not have happened if it had not basically switched to the general approach of market capitalism. But every country needs a balance of markets and regulation. Western arrogance lies in assuming that our policies and institutions have it all figured out better than others'.
JF
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ASHFAQ PASHA HUSSAIN Sep 6, 2015

Sorry, Exhibit A & B are missing in the article.
Many thanks for providing the same.
- ASHFAQ PASHA HUSSAIN Sep 7, 2015
  
  ah great.
  Thanks
  Ashfaq
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- Jeffrey Frankel Sep 6, 2015
  
  To Mr. A.P. Hussain,
  There was no intention to include charts with this column. I am sorry for the confusion. When I said "Exhibit A" I meant the first example or piece of evidence (the PBoC leaning against the wind on the exchange rate); and "Exhibit B" meant the second example (the CSRC leaning against the wind in the stock market bubble). Not actual graphs. Sorry.
  JF
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Yoshimichi Moriyama Sep 6, 2015

A free-floating currency, which would require further liberalization of controls on cross-border finacial flows, would be almost purely a matter of economics. But it is not simply so in China; it is a serious political matter. China has been, historically under any dynasties, a society that had to be tightly controled by gigantic political power from the center. It was a society with very strong centrifugal force, which had to be countered by unusually very strong centripetal force. Unless done so, China would go to anarchic pieces, which has happened repeatedly. The CCP knows it. To tell it to unduely liberalize money controls would be to tell it to die. Therefore China would not be able to shake off its economic abberations and abnormalities.
Needless to say, money controls are also an important source of power and wealth to the CCP leaders.

As M. A. J. Jeyaseelan said below, liberalized money flow is important but controls are also important, particularly in many developing countries. Developed countries should not impose liberalization as an uncoditional virtue or goodness. Thailand was hit severely in 1997 because of its liberalized money market. Read, for instance, Stiglitz's Globalization And Its Discontent.
Thai peasants were hit, too. They had to send their daughters, even in low-teens, to pleasure quarters in Bangkok. You could have bought many prostitutions for the price you would have paid for one prostitution in New York City.
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M A J Jeyaseelan Sep 5, 2015

It is utterly wrong to believe that free markets and free floating currencies are the best ways to overcome economic challenges.

What free markets and free floating currencies guarantee is roller coaster rides.

China had orchestrated its recent history of economic success with the help of strategic regulations. It would not have been possible for China to become the global manufacturing hub of the world, to the chagrin of most developed economies, without such well contrived regulations.

Free markets and free floating currencies are not the best ways to manage either the economy of any country or the world efficiently. There is a lot to learn from the ways in the Chinese have managed to meet their economic challenges with the help of well thought out regulatory strategies.

Of course, there is an irresistible temptation among the emerging economies to emulate developed countries or to give in to their pressures, which invariably lands them in to trouble. The recent stock market bubble of China is a glaring example of such deviations.

The emerging economies owe their recent success more to their regulatory frameworks than anything else. They will be well advised not to fall in to the traps recommended by the western economists. This is the lesson that China needs to learn from the recent stock market bubble.
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