One-Off Devaluation Discussed By Economist
Chief economist Zhu Baoliang of State Information Center writes:
(B) of the monetary policy to a stable neutral. First, the implementation of sound monetary policy. It is suggested that the total social financing and broad money growth should be about 12%, and maintain a reasonable and reasonable liquidity scale. The second is to further improve the RMB exchange rate market-oriented level, and enhance the flexibility of the RMB exchange rate, or even a one-time devaluation of the renminbi, so as to maintain the stability of the RMB in the equilibrium level. At the same time, the proper control of foreign exchange outflow, the state-owned enterprises in overseas real estate, antiques, teams and other non-substantive, non-technical M & A activities to be strictly limited. Third, closely tracking study American influence elected president’s economic policies on China, the foreign exchange market volatility and prevent cross-border capital outflows triggered massive financial risk domestic bond market, the real estate market.
This was always the likely destination because eventually reserves run out, and long before then, competent nations devalue their currencies. China’s only mistake, and they are not alone in it, is they did not read the political tea leaves as we do here and anticipate the rise of protectionist/nationalist forces all over the world. Critics will say it was always a bad time for China to devalue, but depreciation was inevitable given prior monetary policy. The political situation was likely to deteriorate. Maybe there were behind the scenes deals, maybe not, but they had a very weak American president who was unlikely to respond. Now the game has changed. The politics and economics are much worse for the renminbi. The fallout will be worth, either economic, political, or both.
On the bright side, if one-off devaluation is now a public topic, it’s time to start making a shopping list.