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北京大学英语新闻网/Peking University News
2009 Beijing Forum - Interview with
Prof. Yao Yang
PKU NEWS 2009--11—12
http://ennews.pku.edu.cn/news.php?s=257965137
Peking University, Nov. 12, 2009: Prof. Yao Yang, Professor and Deputy Director of
China Center for Economic Research of Peking University, Editor of China Economic
Quarterly, presented his essay "Are Global Imbalances Curable?" on the morning of
Nov. 7th in the Economics session of 2009 Beijing Forum. Xiang Yunke, reporter
from PKU English News Website, was able to interview Prof. Yao Yang on his view
of trade imbalances and the ongoing financial crisis.
R – Reporter from PKU English News Website
Y – Prof. Yao Yang
R: You mentioned that the static financial markets in the surplus countries might also
be a cause of the financial crisis. What do you think is China's role as a surplus
country in the origin of this crisis?
Y: China's underdeveloped financial markets play an important role for China to run
high current account surpluses because they have not done a good job in fully
utilizing the savings provided by exports.
China was not a direct contributor to the financial crisis, but to the extent that
excessive liquidities did provide the soil for the crisis, China was part of it. Saying
that China had nothing to do with the crisis is not correct. At least, China is part of the
global imbalances from which the crisis emerged.
R: Do you think China's surge in trade and current account surpluses happened
because RMB is still undervalued, under which circumstances, the 20% appreciation
has only eased the situation that could have been a bigger surge?
Y: I do not think that RMB undervaluation was a big deal for China's current account
surplus -- indeed, I do not believe that RMB is grossly undervalued. I have a study
showing that RMB was not much undervalued by June 2008. In terms of the
relationship between the exchange rate and current account surplus, we need to look
at the real exchange rate instead of the nominal exchange rate. Even a country has a
fixed nominal exchange rate, its currency will have real appreciation when it runs
large current account surpluses - that is, its domestic price level will rise - and then
its exports will lose competitiveness, at least in the medium and long run. China's
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