The restructuring of China's foreign exchange reserves is very inconvenient for the people to exchange foreign currencies. The scale of China's external debt is limited. Therefore, China is fully qualified, capable and justified to allow the renminbi to "depreciate in an orderly way".

The so-called "conditional" means that: depreciation will not lead to the accumulation of foreign exchange by many people, resulting in a shortage of foreign exchange, and will not bring about the problem of foreign debt being unable to repay. Therefore, devaluation of the renminbi will not lead to currency crises. The so-called "capability" means that nearly 4 trillion of China's foreign exchange reserves have become very cumbersome. If the depreciation of the RMB can drive some speculative capital out of the international currency, it will make the amount of foreign exchange reserves more real and the quality higher.

The key point is why the reason for RMB depreciation is sufficient. We have stressed many times, the fundamental reason is that the RMB has been overestimated.

There are three main reasons for the overvaluation of the renminbi:

First, according to the theory of purchasing power parity, the same quality of commodities, including bulk agricultural products (000061 shares), is cheaper than the domestic market, which means that the RMB is overvalued.

In fact, in recent years, the prevalence of tourism in Shenzhen has been popular. People in Hongkong actually buy daily necessities in Hong Kong, which is evidence that the renminbi is overvalued.

This year's central document No.1 pointed out that the price of China's staple agricultural products has been higher than that of the international market for many reasons, but the overvaluation of RMB is certainly one of its important factors.

It is not alarmist. If the RMB continues to appreciate, it will surely destroy the whole Chinese agriculture.

Second, according to the theory of interest rate parity, does China still have room to raise interest rates? I don't think so. If interest rates are pulled up again, even if they remain the status quo, China's real economy will go bankrupt in large areas.

In fact, the difficulty of financing and the high cost of financing are the real problems that lie ahead of the Chinese government.

Well, if we think that the RMB interest rate fall is expected to be determined, and the US dollar rate hike is expected to be determined, why does the renminbi have to continue to appreciate?

Third, the downward pressure on China's economy is huge, and the US economy is not stable enough, but at least it is a shock.

Based on the comparison of economic fundamentals, should the RMB appreciate or depreciate against the US dollar at least?

We always say: let the market supply and demand determine the RMB exchange rate.

Sorry, the theoretical basis of this view is the effective market hypothesis.

This theory holds that all information that affects prices will be included in the results of market exchanges.

Since China's trade is "unbalanced", the change in the RMB exchange rate will automatically restore its balance.

Is that so?

Is my research conclusion definite?

If we recognize this theory, we must realize that the RMB exchange rate reached by the supply and demand of the market will contain the information of unequal position in the US, China, Europe and China. If such information is necessarily included, will the exchange rate formed by it be "balanced"? If it is not balanced, has the RMB exchange rate been seriously distorted and seriously overestimated?

There is no doubt that our comprehensive review of the most basic exchange rate theory should be that the renminbi is indeed overvalued.

Why do we not allow it to depreciate? Is it because Americans want the renminbi to rise? What is the purpose of forcing the renminbi to appreciate? What is the purpose of China's central bank to abandon China's monetary sovereignty because of the wishes of the Americans?

At the end of last year, China

Interest rates are skyrocketing again. Why do many people analyze monetary tensions and dig for monetary tensions? That's bullshit.

In my opinion, if the central bank wants monetary tension, will the currency become tense? Why does the central bank want monetary tension, raise interest rates, stabilize exchange rates, and prevent devaluation of the renminbi?

Brazil has done this, and Russia is doing it, but is it working?

I can say responsibly: as a weak currency country which is difficult to separate monetary policy, the way to raise interest rate to stop the depreciation of the currency is to kill the goose that lays the golden eggs.

Because high

It will severely destroy the domestic economy, seriously damage domestic demand, and provide a more sufficient reason for the depreciation of the local currency: economic recession.

This is the key reason why Russia has just added interest rates to a very fast drop.

China must never again plunge its economy into a vicious circle for the sake of currency.

The most effective way to prevent excessive depreciation of the RMB is to strengthen capital control.

Yu Yongding, a famous expert who advocated the promotion of RMB floating freely, has recently pointed out that the "three element paradox" has been falsified by China's past practice. Now China must pay attention to the degree of capital openness, and the risk of further opening has increased greatly.

I think China's open action should be orderly and controllable QFII, so as to attract international industrial capital rather than allow industrial capital to escape.

stay

Under the premise of relatively stable reserve, we should drive away currency arbitrage speculative capital and introduce international industrial capital.

To achieve this, we must implement relatively loose monetary policy and allow the RMB to depreciate in an orderly way.

On the issue of economic structure, we can control what we support and what industry and tax policy do not support.

It is a serious mistake not to use monetary policy to control the economic structure.

But what we see is the fact that the Central Bank of China is desperately emphasizing the role of monetary policy in structural adjustment.

I understand that this is nothing but a reason for tightening money, and objectively pushing up the value of the renminbi.