模联mpc新闻报道

Skin in the game

--joint investment, shared burden SHANGHAI, April, 13th, (MENA)

China

The crux of the current global imbalance, from the point of China’s view, is that only a minority of the most advanced countries possess the knowledge, innovation and flourishing service sectors that will enable them to enjoy strong economic and financial prospects. These same countries are also the world’s largest debtors. Meanwhile, the overwhelming majority of developing countries suffer a shortage of capital. This, at root, is the origin of the recent financial crisis.

But even mong the giants, China is in a league of its

own, with a $2 trillion arsenal of reserves, a

current-account surplus, little connection to foreign

banks and a budget surplus that offers lots of room to

boost spending, China still expressed concern on some

other countries which suffer more during the financial

crisis.

Except for the typical suggestions such as more detailed

regulations, strengthened supervision, tighter

collaboration, the core call of China is the establishment

of a diversified international monetary system. In fact,

multiple currencies can not only ease the dilemma of financial situation, but can also weaken their rivals to some extent.

In order to achieve such a tough goal, China advocated creating an international reserve currency that decoupled from a sovereign state, and able to keep its value long-term stability, and apart from this, China strongly suggested expanding the using range of the international monetary fund's Special Drawing Rights (SDRS). However, the topic of SDRs has been controversial during three sessions even most countries have already reached a general consensus.

On the contrary, China poised a quite optimistic attitude to SDRs. The value of the SDR is based on a basket of currencies (the dollar, euro, yen and pound) that might expand one day to include the yuan, which obviously will be a good news for China. But MENA holds the view that, if the Chinese want the yuan included in the SDR, they will probably have to liberalise their capital account first. That would be welcome in itself—as a shrewd lawyer would no doubt be as quick to point out as a sharp economist. Have the Chinese really considered the sacrifice that it will make, or they just regard it as a path to the refining of not only Chinese financial systems but

also the global ones?

USA

Though the financial crisis was global, it originated in

America’s uniquely fragmented financial system,

overseen by a patchwork of federal and state regulators.

Since recession ended in June 2009, GDP growth has

averaged 2.8%, roughly its long-term trend. After so deep

a slump, the pace is usually much faster. The gap between

actual and potential GDP has been stuck at around 5%

since late 2009 (see chart 1). From some angles, the

picture is even worse. Measured by totting up income

rather than spending, the economy is no bigger than in

2006. The proportion of working-age people with jobs is lower than in the trough of the recession.

A little to surprise, USA agreed with the proposal of SDRs. In fact, the dollar system is so beneficial to the USA that it will never abandon it. First, the reserve-currency status of the dollar helped to create global imbalances. Surplus countries have little choice but to place most of their spare funds in the reserve currency since it is used to settle trade and has the most liquid bond market. But this allowed America’s borrowing binge and housing bubble to persist for longer than it otherwise would have. Second, the country that issues the reserve currency faces a trade-off between domestic and international stability. Massive money-printing by the Fed to support the economy makes sense from a national perspective, but it may harm the dollar’s value.

The explanation by the USA delegate is so selfless that it is almost willing to sacrifice itself for the sake of the stability of the global finance. MENA can’t help to doubt what’s the meaning of presence of US delegate.

Japan

Seen as lesson to be drawn by

European countries, Japan

successfully showed the world how to

stop oneself from more efficient

development in the economic field.

Actually, there is no financial crisis in

Japan but a real economic crisis, taking a terrible toll on real economy, especially