The impact of yen appreciation on domestic prices in Japan. From 197 1 to abandon the fixed exchange rate of Japanese yen, from August 197 1 to February 1973, Japan implemented a highly managed flexible exchange rate system. During this period, Japan tried to stimulate domestic demand to increase imports and relieve the pressure of yen appreciation, even at the expense of inflation to a certain extent. By the summer of 1973, the CPI inflation rate in Japan had risen to 10%. With the outbreak of the oil crisis, Japan's inflation rate rose to 30% at 1974. In the next two years, Japan experienced a severe economic recession to cope with inflationary pressure. It is a policy mistake for the monetary authorities to choose inflation instead of currency appreciation this time.
During the period of 1975- 1985, except for the serious inflation during the two oil crises, the price level was relatively stable at other times. However, after the "Plaza Accord" of 1985, the appreciation of the yen was large, and it was a short-term sharp appreciation, which led to the suppression of the appreciation of the yen and the decline of prices.
After the Plaza Accord, the intervention of the Bank of Japan in the foreign exchange market made the Japanese economy enter the downward channel at the end of 1986. In order to stimulate economic recovery, the Bank of Japan turned to expansionary financial policy, which brought about an oversupply of money. At the same time, the Japanese government adopted an expansionary fiscal policy to encourage urban development plans and guide private investment to the real estate and stock markets, and the economic bubble gradually accumulated. When Japan noticed the harm of economic bubble, in order to cope with the serious imbalance in China, Japan began to raise interest rates and implement austerity policies. After the bubble burst, Japan's economy entered a recession period of 10 years. During this period, the overall price level has been falling all the way.
A notable feature of the "ten-year depression" is economic recession and severe deflation. On the one hand, the reason for the price decline comes from the oversupply caused by excessive investment during the bubble economy period, and on the other hand, the price of imported goods falls due to the appreciation of the yen and the influx of cheap overseas goods. Asset price inflation (mainly in the stock and real estate markets). In order to cope with the international and domestic imbalances, Japan adopted an expansionary fiscal policy during the appreciation of its local currency after the Plaza Accord, which is the main reason for Japan's asset price inflation.
What we may not know, however, is that the appreciation of the yen has actually promoted the status of Japan's economy and brought greater benefits to Japan.
First of all, the appreciation of the yen has enhanced the position of the Japanese economy in the world. Japan's GDP is the second in the world, second only to the United States. This "miracle" is partly due to the sharp increase in GDP in dollar terms caused by the appreciation of the yen. 1985 Japan's GDP was $65,438 +0.369 trillion, 1995 reached $5.3 trillion. During this period, the dollar fell from 237 to 83 against the yen, and the yen appreciated nearly three times.
Secondly, the appreciation of the yen also means the growth of Japanese national wealth. 1970, 1 USD is equivalent to 300 yen, and Japan's per capita GDP is 1967 USD. With the appreciation of the yen and economic growth, Japan's per capita GDP reached 16704 USD in 1986 and rose to 42336 USD in 1995.
Thirdly, Japan has continuously improved the core competitiveness of enterprises and effectively resolved the impact of the sharp appreciation of the yen on Japanese trade. Objectively speaking, currency appreciation will reduce the price competitiveness of exports, but if enterprises have core competitiveness, the external market will become dependent on the country's products, and currency appreciation will actually increase the export price and create corresponding welfare. In the process of the sharp appreciation of the yen, the Japanese government supports Japanese enterprises to carry out continuous technological innovation. Through total quality management, foreign direct investment, mergers and acquisitions, outsourcing and avoiding exchange rate risks through the foreign exchange market, Japanese enterprises have basically resolved the impact of the sharp appreciation of the yen, and the trade surplus has always been at a relatively stable level, which can be said to be a great miracle of the Japanese economy.
Secondly, in the process of rapid and substantial appreciation of the yen, Japan has also expanded its capital account welfare to the extreme. With the appreciation of the yen, the Japanese government has continuously promoted the provision of preferential government loans and commercial loans to China, Southeast Asian economies and other emerging market economies. The appreciation of the yen has brought huge exchange rate losses to countries that have not effectively avoided exchange rate risks, while Japan itself has gained a lot of currency appreciation gains. With the sharp appreciation of the yen after the Plaza Accord, Japan's international loan position rose rapidly from $707 billion 1985 at the end of February to $121500 million at the end of February, and then declined with the depreciation and fluctuation of the yen. Japan's international loan position 1993 was1627.7 billion USD at the end of June, and it was 2195.9 billion USD at the end of February, 2005. We can figure out how much capital gains the appreciation of the yen has brought to Japan.
Finally, the appreciation of the yen, the internationalization of the yen and a large number of foreign loans and direct investments in Japan have gained extensive strategic resources and economic depth for Japan, which lacks resources and economic depth. According to relevant statistics, in 2005, Japan's international assets reached 4.6 trillion US dollars, and its net assets after deducting liabilities reached10.6 trillion US dollars. Moreover, in 2005, the balance of overseas direct investment of Japanese enterprises was as high as 41400 million US dollars, and its overseas GDP should not be underestimated.
All in all,
The appreciation of the yen does more harm than good to Japan.
Lessons from China: In view of the current economic imbalance at home and abroad, the RMB will continue to appreciate in a trend as a whole. However, due to the periodicity of dollar exchange rate fluctuation, RMB appreciation should adhere to the basic principle of gradual adjustment to reduce the negative impact on actual output and employment, and at the same time avoid the exchange rate risk brought about by the periodicity of dollar fluctuation.
The appreciation of RMB is effective in curbing inflation in the long run, but in the short run, the dual characteristics of RMB caused by historical factors will continue to exist and maintain for a period of time to balance the deviation of various variables reflected by the internal and external imbalances accumulated in the previous period.
Under the current background of RMB appreciation, the content of macroeconomic policy should pay more attention to domestic balance and take maintaining economic growth and price stability as important policy objectives. At the same time, the means to control inflation should be a set of monetary and fiscal policies, including not only the intervention of the money market, but also related policies in demand management, supply management and international capital flow supervision.
The appreciation of RMB is an opportunity for China to adjust its industrial structure. In the stage of sustained and high-speed economic growth, we should fully consider the upgrading of industrial structure, improve the technical level, management level and competitiveness of the industry, and make preparations for future economic development.