主题：疑问 -- 赢政

也许中国既输出通货膨胀又向世界输出通货紧缩，呵呵，不过在某个时期，其中的一个会占主导地位而表现出来，如此而已。

The China Syndrome

Joachim Fels (London)

I cannot remember a single discussion on global macro issues with clients or fellow economists over the past year that did not, at some stage, touch upon deflation, China, or both. More often than not, the two topics are seen as one these days. China is a major factor behind global deflationary pressures, or so the story goes. Hence, we decided to probe the issue in a client workshop on "Deflation: Made in China?", which formed part of Morgan Stanley's annual MacroVision event in New York last week (for a summary of the conclusions from the entire MacroVision exercise, see Stephen Roach's dispatch "The Least Likely Outcome," 3 February 2003).

Andy Xie, Morgan Stanley's Greater China economist, kicked off the workshop by describing eloquently and convincingly the huge global competitive pressures emanating from China's growing integration into the world economy. Then, I took issue with the prevailing consensus and tried to explain why, in my view, China was NOT to blame for the world's deflationary perils. Some clients nodded politely, a few even took notes. Yet when we went around the table afterwards, one by one they declared that they, of course, saw China as a major source of global deflation. Where did I go wrong? Maybe you can help me. All you need to do is scan my three main arguments below and drop me an e-mail ([email protected]) to point me in the right direction. Here we go.

First, conventional wisdom has it that China is a source of deflation because it is flooding world markets with cheap exports. There is no denying the fact that China has become a major player in world trade; its share in world exports has doubled to around 5% over the past 10 years. However, China is not only growing its exports rapidly, but also its imports. In fact, in the 1999-2001 period China's imports have risen faster than its exports. China is thus not only a source of additional supply but also a source of additional demand. As a resource-constrained country, China is a major importer of commodities, and its demand for raw materials will continue to rise rapidly with industrialization. As Andy Xie points out, China's industrialization could easily have an impact on commodity prices similar to post-WWII reconstruction in Europe and Japan. Also, China is a big importer of capital goods. Last year, China even overtook the US as the world's biggest recipient of foreign direct investment. These FDI inflows are typically accompanied by imports of capital goods as multinational companies shift their production bases towards China. Last, but not least, with rising living standards, Chinese households’ appetite for imported consumer goods will rise rapidly over the next decade. Taken together, anybody who worries about the potential deflationary effects of Chinese exports should be equally worried about potential inflationary effects of China's rising import demand.

Against this backdrop, a slightly more refined version of the "China-causes-deflation" argument focuses on the fact that China is running a trade surplus with the rest of the world. Put differently, China supplies more to the world market than it absorbs from it, which is supposedly fuelling deflationary pressures. I have two quibbles with this argument. First, the size of the Chinese current-account surplus is hardly big enough to make any material impact. China's current-account surplus in 2001 was only US$18 billion and thus smaller than, to name just a few, Canada's (US$19 billion), France's (US$24 billion) and Switzerland’s (US$25 billion) surpluses. Yet nobody is accusing these countries of being a source of deflation for the world economy. Second, and more fundamentally, China's surplus savings (recall that the current-account surplus equals the excess of domestic savings over domestic investment) don't disappear in the (rice) mattresses but are recycled into the rest of the world via the acquisition of foreign assets, mainly in the form of US Treasuries and, increasingly, euro-area bonds. Thus, by being a net capital exporter, China is providing the means to (chiefly) the US government and US consumers to live beyond their means. I find it difficult to see why this should be deflationary. Which brings me to my third and last point.

In the last analysis, at least in my book, whether the world falls into deflation is not determined by the Chinese export sector, but by the world's major central banks. True, the emergence of China as a major supplier of manufactured goods has exerted downward pressure on traded goods prices and will continue to do so, especially if, as seems likely, the Chinese authorities continue to resist a revaluation of the renminbi. However, the downward pressure on traded goods prices implies that consumers will have more money to spend on other items (say, services), which should lead to rising prices there. A priori, there is no reason why this change in relative prices should affect the overall price level in any meaningful way. And even if there were some incipient downward pressure on the overall price level, don't forget that most central banks these days have explicit or implicit inflation targets. Thus, they would respond (or have already responded) to any signs of significant downward pressure on prices from deflation in the traded goods sector by cutting interest rates. This holds especially true these days, where most central banks have become deflation fighters, worrying more about the downside risk to prices than the upside risks.

And that’s precisely where today's situation differs from that of the late 19th century, when the emergence of the United States as a major player in world trade coincided with a prolonged period of deflation. Back then, the world was on the gold standard. Hence, the strong capital inflows into the US led to gold inflows in the US and outflows from the more developed countries, mainly in Europe. This gold-flow mechanism led to a monetary contraction in Europe, thus causing a fall in the overall price level. In today's paper currency world there is no such mechanism that would force the developed world to tighten monetary policy in response to strong growth in the emerging economies. Rather, the opposite holds true today: the downward pressure on traded goods prices emanating from China's exports enables the Fed, the ECB, and other central banks to pursue a more expansionary policy. As I have explained elsewhere, my personal worry is rather that central banks are overdoing it on the downside and will thus sow the seeds of a resurgence of global inflation in the next few years.

All in all, if you worry about deflation, don't point at China but focus on what the major central banks are doing (or not doing). The arrival of China as a major player in global trade and capital markets is a hugely positive event for the world economy. Put simply, the advent of a new kid on the block who is willing to offer its skills and products at a lower price makes the world economy at large better off. There are big gains from trade that will be reaped by both China and its trading partners in the process. After all, trade is a positive-sum game. All too often, such simple truths tend to be ignored in gloomy times like these.