Where Are Taiwan's "18 Responses" to the Global Currency War?

Where Are Taiwan's "18 Responses" to the Global Currency War?
China Times editorial (Taipei, Taiwan, ROC)
A Translation
October 14, 2010

For the past two weeks, the most striking aspect of international financial markets has been the struggle between two superpowers, the Chinese Mainland and the US, over the upward revaluation of the renminbi. Emerging markets have joined hands opposing an upward revaluation of the RMB. The current situation is more complex than in the past. The USD, the RMB, the JY, and various emerging market currencies have intersected. The major powers have mutual interests, both positive and negative.

Following the 2008 financial tsunami, the advanced economies of Europe and North America fell into sharp recession. Beijing injected four trillion RMB into its economy to increase domestic demand. It hoped to gradually convert its single-engine economy, driven by exports, into a twin-engine economy, driven by both exports and domestic demand. Because of this, many countries hope Mainland China will be the force behind a global economic turnaround. Washington and Beijing joined hands to fight the financial tsunami. Their relationship has become extremely close. Hence the expression, "G2." The US Currency Report has not listed Beijing as a "currency manipulator state."

This year however, the US has frequently touched sensitive nerves during its Western Pacific military exercises. The US economy has shown no improvement. Unemployment remains close to 10 percent. The US government is under tremendous pressure. At this point, claiming that the yuan has been deliberately undervalued and is "taking away American jobs," is an easy way to find a scapegoat. The value of the RMB rose dramatically after being floated, establishing new highs. Nevertheless the US government demands that the RMB be revalued upward even further. The Chinese Mainland, out of national pride or economic realism, balks at revaluing the RMB as much as the US demands. In fact the tug of war over the revaluation of the RMB is not purely a monetary and economic issue. It is part of a "total war" between two major powers.

Meanwhile, the Japanese Yen has been subjected to a huge upward revaluation, The exchange rate is approaching 80 JY to the USD. Japanese companies must bear the brunt of this revaluation. This has forced the Japanese government to intervene with an injection of several trillion yen into its economy. But the Japanese government's unilateral intervention will not necessarily inspire other major industrial nations to ride to the rescue. Other countries are happy to see the JY appreciate. As a result, the effectiveness of the Japanese government's intervention may be limited. The appreciation of the JY has two causes. The underlying cause is spread trading funds covering the JY following the financial tsunami. The proximate cause is the Mainland Chinese government, which has been buying vast quantities of Japanese government bonds. The two Asian powers are arguing over whether Mainland China is deliberately attempting to force an upward revaluation of the JY.

Following the financial tsunami, emerging market countries must confront the world's central banks. First they injected trillions of dollars to the market. Then they implemented a near-zero interest rate policy. They made unlimited funds available with a "quantitative easing" policy, flooding the market knee deep in capital. High interest funds looked to emerging markets, which were the first to recover in the wake of the financial tsunami. Several trillions of dollars in hot money from all over the world poured into these emerging markets. Naturally these national currencies appreciated. But these countries had just climbed out of a recession. Domestic demand was insufficient. They needed to strengthen their exports. They were afraid currency appreciation would impact their export competitiveness. Needless to say, they all did their best to stop any upward revaluation.

As a result, the Brazilian Finance Minister publicly spoke of the race to devalue among nations, Japan 's forceful intervention in the exchange rate, the Central Bank on Taiwan pegging its exchange rates to those of its main competitor Korea, strongly defending the 31 NT per USD level. The interest some emerging market countries showed in the so-called "hot money tax" was a product of this situation. The International Monetary Fund has issued repeated warnings. It is concerned that if governments use monetary policy as a weapon to solve domestic economic problems, they could seriously jeopardize any global economic recovery.

The US wants to compel an upward revaluation of the RMB. The situation is similar to the 1985 Plaza Accord, which attempted to compel an upward revaluation of the JY. The United States was suffering from a weak domestic economy. Japan was enjoying a huge trade surplus with the United States. The United States, along with other major industrial countries, intervened. Japan played along. Today's situation differs. The Chinese Mainland does not need to play along with the United States the way Japan did. The Chinese Mainland has links with all major industrial nations, who may not be able to reach a consensus. Therefore the situation is more complex and unpredictable than in the past.

The most important point for future reference, is of course, the exchange rate report published by the United States. Will it accuse Mainland China of being a currency manipulator? Will it impose punitive tariffs on exports from Mainland China? If it comes to this, then a global trade war could erupt. All manner of protectionist policies and puniitve measures against competitor nations may be imposed. The pace of global economic recovery will inevitably be reversed. History has taught us a series of painful lessons. Unless all nations lose their senses, the probability of this happening is low. But a tug of war and shocks to the system during the consultation process are inevitable. The Republic of China government may not have much leverage in this rivalry among international powers. But it must protect itself. It must maximize the good, and minimize the bad. The government must have "18 Responses," not just the one in which the Central Bank defends to the death the 31 NT per USD exchange rate.

全球貨幣戰爭 台灣的「18套劇本」在哪？
2010-10-14
中國時報

近兩周來，國際金融市場上，最引人矚目的事件，莫過於以中、美兩大強權角力的人民幣逼升為主軸，新興市場聯手抗升的貨幣戰爭。相較過去，這次的情勢更複雜，美元、人民幣、日圓，及其它新興市場國家貨幣彼此交錯，強權國家之間的利害也互有正向或負向關聯。

二○○八年金融海嘯後，歐美先進經濟體大幅下滑，大陸祭出四兆人民幣的擴大內需方案，期望把原來帶動經濟的出口單引擎，逐步轉為出口與內需並重的雙引擎，並因而成為海嘯中，許多國家寄望能帶動全球經濟脫困的力量。當時，中、美兩國攜手力抗海嘯，關係如膠似漆，因而有「Ｇ２」之稱。美國的匯率報告，也因而並未把大陸列為「匯率操縱國家」。

不過，今年以來，美國頻頻在西太平洋的軍事演習，觸動雙方敏感的神經。美國內部經濟無起色，失業率仍接近十％，讓美國政府承受莫大壓力。此時，以人民幣蓄意低估，「搶走美國人的就業機會」，就成為最廉價的代罪羔羊了。縱然人民幣在加大浮動區間之後，價位頻創新高，但美國政府壓迫人民幣升值的力道仍不斷加強。而大陸方面，不論就其「民族自尊」，或是其經濟承受能力，都不可能如美國所願的讓人民幣大幅升值。人民幣升值的角力，實際上已不是單純的貨幣與經濟問題了，而是兩大強權「總體戰」的一環了。

而同時，日圓也在近日因升值過鉅，逼近八十日圓兌一美元這個日本企業承受底限，因而迫使日本政府投入數兆日圓干預；但日本政府獨力干預，未能得到其它主要工業國奧援，其它國家倒是樂於看到日圓升值，因而使其干預難有成效。日圓的升值，遠因是海嘯之後的套利交易資金回補日圓，近因則是大陸政府開始大筆的吃進日本國債。兩個亞洲強權間，又為了中方是否蓄意逼迫日圓升值而你來我往、爭論一番。

至於新興市場國家面對者，則是海嘯後的全球各國央行，先是挹注數兆美元資金到市場，接著實施接近零利率的低利政策，及資金無限寬鬆的「量化寬鬆」，讓資金泛濫淹腳目。這些逐高利而居的資金，就看上海嘯後率先復甦反彈的新興市場，全球數兆美元熱錢分頭湧入這些新興市場，各國貨幣當然要升值。但各國才由谷底走回，內需支撐力不足，都需要加強出口這個引擎，深怕貨幣升值影響出口競爭力，當然是竭盡其能的阻止升值。

因此，我們看到巴西財長公開講出各國競貶、日本大力干預匯率、台灣央行緊盯主要競爭國韓國的匯率，力守卅一元關卡，部份新興市場國家有意開徵所謂的「熱錢稅」，都是這個情勢下的產物。國際貨幣基金為此再三發出警語，憂心各國政府競相以貨幣做為政策武器，以解決本國的國內經濟問題，將重傷全球經濟復甦。

美國要逼升人民幣，其情勢與一九八五年廣場協定後逼迫日圓升值雷同，同樣是美國受困於國內經濟疲弱，而日本則對美國享有龐大的貿易順差。但當時是美國與其它主要工業國聯手干預，日本也買美國的帳。今日的情況則是大陸不必如日本般對美國言聽計從，主要工業大國中，在大陸的合縱連橫下，也未能達成聯手行動。因而局勢較過去又更複雜難測。

未來最重要的觀察點，當然是美國即將公布的匯率報告中，是否把大陸列為匯率操縱國，並進而對大陸出口品祭出懲罰性關稅。如果走到這步，全球的貿易大戰將因而點燃，各種貿易保護政策、對競爭國的懲罰性措施都將紛紛出籠，全球經濟復甦腳步必然因而反轉。鑑於過去歷史慘痛的教訓，除非各國都失去理性，否則走到這步的機率應低。不過，雙方角力、協商過程中的震盪難免。台灣在此國際強權較勁過程中，或許沒有太多著力處，但如何自保、趨吉避凶，政府有關單位是該有個「十八套劇本」，而不是只有讓央行隻手死撐卅一元關卡這麼一招。