1. Avoid further currency crisis, especially protect Hong Kong's linked exchange rate system.
2. It lightens the economic pressure of devalued countries, because if China devalues, the export growth that neighboring countries may bring will be affected.
3. Establish the image of China as a responsible big country.
4. The non-devaluation of RMB has maintained the economic order in Southeast Asia. China's "bloodless sword" has replaced Japanese economic leadership in Southeast Asia.
Zhu Rongji has repeatedly stated that the RMB will not depreciate. Of course, we must believe that Hong Kong is a part of China, and the US dollar will naturally follow the RMB. Zhu Rongji also said that the failure to devalue the RMB will make great sacrifices to China's economy. For Hong Kong, the high value of the Hong Kong dollar makes the export price uncompetitive, which directly affects the tourism industry. The influence of foreign capital in Hong Kong is much more serious than that in the Mainland. The mainland has a huge domestic market, so it can still attract some enterprises that rely on the mainland domestic market. These influences are secondary, and the biggest factor is that the Hong Kong dollar is freely convertible and can be attacked by speculators at any time. The middle class must pay for housing. Although interbank interest rates have dropped, mortgage interest rates remain high. However, because there is no pressure from speculators, the domestic interest rate of RMB has fallen instead of rising. Hong Kong people have sacrificed much more to not devalue than mainland people.
Zhu Rongji didn't talk about the benefits of not devaluing. If RMB depreciates, it will bring another economic crisis to Southeast Asian countries. Japan, which has the largest reserves in Southeast Asia, has depreciated for three years and has never stopped. Singapore and Taiwan Province Province devalued automatically last year, thus enhancing their export competitiveness and ensuring employment opportunities. Therefore, devaluation is selfish. Which country in the world is not selfish? In Britain, Zhu Rongji has repeatedly stressed that the RMB will not depreciate, which has greatly helped Southeast Asian countries to stabilize their currencies, thus accelerating their economic recovery. Even the economies of Europe and the United States have stabilized. During the Warring States period, the way to achieve hegemony was "respecting Zhou", which maintained the international order at that time. The non-depreciation of RMB has maintained the economic order in Southeast Asia. China's "bloodless sword" has replaced Japanese economic leadership in Southeast Asia.
Zhu Rongji's performance led to Margaret Thatcher's praise of China in Britain. She said, "In the future, there will be two big countries in the world, one is the United States and the other is China!" .
The biggest advantage of not devaluing China is to enhance China's international status. But there are also more direct benefits; (1) Not devaluing will help China to join GATT, (WTO )(2) create a good atmosphere for the upcoming Sino-US summit and strengthen China's card in the negotiations. (3) Recently, the French President also invited China to join the G8 Summit next year.
In short, there are sacrifices for the renminbi not to depreciate, but there are also benefits. If the Hong Kong dollar does not depreciate, the sacrifices of Hong Kong people will be much greater than those in the Mainland, and the benefits will be little. Before the economic storm last year, I suggested in this newspaper that the Hong Kong dollar should depreciate. At that time, that suggestion was feasible, but now the times have passed.
It is still good for a small number of people that the Hong Kong dollar does not depreciate, which has great benefits. The property developer's assets are real estate based on Hong Kong dollars. The linked exchange rate enables him to convert Hong Kong dollar debts into US dollars to reduce interest expenses. However, real estate developers are billionaires and can bear high interest rates. Unfortunately, ordinary citizens can't do this, so they have to tighten their belts and get expensive benefits!
The constant value of RMB and Hong Kong dollar is not conducive to the export competitiveness of China and Hong Kong. Premier Zhu was far-sighted and put forward a plan to develop domestic low-profit real estate, which not only met the demand of domestic real estate, but also maintained the high economic growth in the past. High growth rate is a good way to increase employment opportunities. Our CEO is far-sighted. He has long proposed the goal of building 85,000 housing units, halving the waiting time for public housing to three years, and increasing and accelerating infrastructure projects to boost domestic demand. This is also a good way to increase employment opportunities in Hong Kong. The listing of the two railways will bring 50 billion yuan to the Hong Kong government and provide opportunities for new railways to raise funds. Under the circumstances of economic recession and tax reduction, the listing of the two railways is a "shot in the arm" for the treasury.