送交者: slashdot 于 2005-5-09, 23:49:38:
As trade partners waited all last week for a Chinese revaluation, economists saw a leadership focused more on letting the good times roll while they can. Hamish McDonald reports from Hong Kong.
For Jim Walker, the chief economist at CLSA Asia-Pacific Markets in Hong Kong, the signs are coming thick and fast.
At the Crown Casino in Melbourne, the front money for gambling junketeers this Chinese New Year was double the amount that Asian high-rollers plonked down last year.
In Shaanxi, a province in China's inland normally regarded as heavily in surplus with labour, minimum wages have just been increased 30 per cent.
At Disneylands around the Pacific rim, signs are going up in Chinese. "They went up in Portuguese a year before the [Brazilian] rial crashed," the Scots economist notes wryly.
All these, Walker says, point to China coming to the late stage of its frenetic economic cycle, one characterised by massive oversupply of a currency so long pegged to the US dollar its holders treat it as the same.
Across town at investment bank Morgan Stanley, its China-watching economist Andy Xie also sees an economic machine going at high speed towards a crash, similar to the meltdown that hit Asian economies in 1997.
"China is an export and investment-driven model and the connection between exports and investment is basically that the state banking system takes the money earned by exports and puts it into investment regardless of returns," Xie says. "That model is likely to last until the crisis."
Neither of these two economists see China's leaders as likely to respond in more than a token way to the invitation by many Western financial chiefs, most recently at last week's Asian Development Bank meeting, to start taking the medicine early in the form of a currency revaluation.
Walker says the signals he's been getting are that Chinese officials agree they have to do something to placate the baying trade protectionists in the US and Europe, set off by the 35 per cent surge in China's first-quarter exports.
But he says it will probably be "disappointing", perhaps only a one percentage point widening of the band around the peg of 8.28 yuan to the US dollar maintained for the past 10 years. Maybe over a couple of years, the band could be widened further.
Xie says he expects Beijing will keep stalling, keeping the expectations of a yuan float or revaluation alive so that speculative inflows from overseas Chinese keep flowing in but trying to put off the evil day as long as possible. Xie thinks they can spin it out another two years.
"If China appreciates the currency like other people are urging, China will eventually have a financial crisis just like in South-East Asia [in 1997]," Xie says.
These views are in distinct contrast to some others. On Friday, for example, the ING Bank's team in Hong Kong said China could reform its exchange rate within three months. "We have changed our view on the initial revaluation and now expect it will be big, around 10 per cent," the bank said. "Our change of view that the initial yuan revaluation will be big stems from the heightened threat of loss of market access."
While the outside world views China as an emerging super-economy, Xie and Walker portray it in different ways as a more fragile developing country with classic weaknesses.
Xie says the case for currency revaluation is a "bubble" itself; like the other bubbles, a revaluation is supposed to deflate. "With an emerging market economy, the pressure for currency to appreciate - usually it's a bubble," he says.
"Look at what happened in South-East Asia 10 years ago or in Latin America before that. Currency value depends on competitiveness and also financial health. In emerging economies, you cannot maintain financial health, so periodically you have a financial problem. You have an over-expansion of money supply and you eventually have currency depreciation. China is no different."
Walker sees China hitting a wall, chiefly in the form of a labour shortage; not the much-publicised reluctance of inland Chinese recently to serve as factory fodder in the sweatshops of Guangdong, the industrial province bordering Hong Kong, but supply gaps in skilled workers and managers.
With about 1 million Taiwanese already employed on the mainland - about 10 per cent of the island's workforce and therefore probably close to the limit - newspapers in Hong Kong and South-East Asia are packed with ads for supervisory or technical jobs in China.
Looming ahead, perhaps in 2007 when a year or two of vanishing profits finally cause a contraction in business activity, is China's first serious slowdown in years, one that could bring new kinds of pain, the CLSA economist says.
"This is the first truly capitalist cycle that China has had," Walker says. "They've had upswings and downswings before but they've all been state sector-led. It's all been manufactured by the government. This time round there will be bad debts accruing to private sector companies and the banks will react much more differently to that."
The fuel for the overheated economy is coming from the central bank's conversion of rapidly accumulating foreign reserves - which hit $US610 billion ($783 billion) at the end of last year and are on track to grow another $US250 billion this year - into yuan and then trying to "sterilise" the monetary effect by forcing Chinese banks to buy low-yield bonds.
As two New York University economists, Nouriel Roubini and Brad Setser, pointed out in a widely remarked paper last week, the central banker's efforts had been only partially successful and the sterilisation effort limited their ability to apply conventional interest-rate remedies to excessive demand.
Nor was the diet of low-yield government paper doing much for profitability in the scandal-prone Chinese banks, whose non-performing loans Roubini and Setser put at somewhere between 46 and 56 per cent of China's GDP.
Also last week, the ratings agency Standard & Poor's said recapitalisation of two of the big four state banks - the Industrial and Commercial Bank of China, and the Agricultural Bank of China - would require injections of between $US110 billion and $US190 billion.
Indeed, the weak position of the Chinese banks and their huge requirements for capital are cited by Xie as one more reason against early revaluation. As well as adding to bad debts by raising domestic real estate and other prices in relative terms, a higher yuan would require more US dollar investment to achieve sound capital adequacy.
Although disposal of bad debts via asset management corporations is lagging badly, Chinese financial authorities are still hoping to bring two large banks - the China Construction Bank, whose assets are mainly infrastructure loans to governments, and the Bank of Communications, which already has a 19.9 per cent "strategic" holding by HSBC - to international share offerings in coming months.
Like others, Roubini and Setser found a Chinese economy driven by cheap factor inputs - including credit, energy and land - rather than productivity growth. "In this dimension, China looks like the 'Asian Miracle' that went bust in the 1990s," they said.
There was a growing perception, at least among Chinese economists, of the "bad bargain" in the China economic model, whereby foreign investors were guaranteed an effective 15 per cent return and China put the earnings into US dollar reserves earning 4 per cent.
They, like CLSA's Walker, see a need for China to switch to an economic model more driven by domestic demand. "China's existing growth model looks to be running up against real limits, both internally and globally," Roubini and Setser wrote. "Sustaining growth will require re-orienting China's economy and relying at least for a while on rapid expansion of domestic consumption to sustain growth."
Revaluation would help do that but at the price of an unknown amount of short- to medium-term pain. Xie says that's the hidden purpose of many advocates of currency reform. "What those people are trying to do is to make China crash, now," he says. "They don't believe the political system will tolerate real financial reforms unless it is forced to. But the economic consequences are serious. What you are talking about is stagnation."
Xie says Beijing hopes to insulate China from the approaching crisis. "Senior leaders know what's going on," he says. "They hope to accumulate as much capital as possible, as many people getting rich as possible, so when you need to make a dramatic overhaul of the economy the country is still stable because enough people have jobs."