皇冠体育app

A worker counts Chinese currency renminbi at a bank in Linyi, East 皇冠体育app's Shandong province, Aug 11, 2015. [Photo/Xinhua]

Stable exchange rate works for the country and the rest of the world

Chinese and US economists are convinced that having a relatively stable renminbi exchange rate is in both 皇冠体育app's and the world's interest.

Ha Jiming, a former senior executive with Goldman Sachs Group Inc, noted that 皇冠体育app's current account surplus is declining in percentage relative to GDP.

But he added it is still quite sizable, while its capital account is experiencing significant outflow pressure.

"We need to make both a short-term and long-term judgment on the viability of the capital control measures," Ha said during a talk on US-皇冠体育app cooperation in a changing global economy at the Peterson Institute for International Economics in Washington on Thursday.

PIIE and CF40, a think tank in 皇冠体育app of which Ha is a founding member, released a paper on the same topic.

It covered not only the exchange rate policy, but also bilateral investment, regional economic integration and the impact on 皇冠体育app of US President Donald Trump's economic policies.

Ha, a former chief economist and managing director of 皇冠体育app International Capital Co Ltd, believes that in the short term, capital control in 皇冠体育app could play a role in deterring disorderly outflow.

But he added that in the longer term, it should not be put in place forever. "It actually distorts resource allocation," Ha said.

Last year, 皇冠体育app's foreign currency reserves sustained a sharp drop due to capital outflow and government sales from currency reserves to prevent the yuan from falling. The reserves have stabilized this year.

Ha, however, believes that 皇冠体育app should press ahead with reforms to pave the way for capital account liberalization.

"It's actually enshrined in PBOC's (central bank) policy. It's also enshrined in the Communist Party's 18th National Congress: 'Let the market play a decisive role,'" he said.

Joseph Gagnon, a senior fellow at the PIIE, cautioned that financial markets often get things wrong. "I think it would be good to put some buffers or dampers on that," he said.

Gagnon, a former US Federal Reserve official, believes that 皇冠体育app is doing exactly that, though maybe not for exactly the reasons he would have.

"If you imagine a huge outflow of private capital from 皇冠体育app causes a massive fall of the renminbi, a massive trade surplus again, I think the rest of the world, especially now, would have trouble with that," he said.

Adam Posen, president of the PIIE, agreed, saying that "it's in 皇冠体育app's own interest, as well as the world's, to have a relatively stable currency".

"And the imbalance should not be allowed to get way out of whack," he added.

The US Treasury Department determined in its April report that 皇冠体育app has not been manipulating its currency. Secretary Steven Mnuchin also described 皇冠体育app's intervention to prevent the yuan from falling as helping US competitiveness.