On September, the study report named ‘the exchange rate cooperation by power economies in globalization ’was announced in the 2010 annual meeting of the New Champions held by World Economic Forum, in Tianjin. The results show that the current level of RMB’s real effective exchange rate has not been underestimated, western countries are unreasonable to judge that the value of RMB is undervalued, and it will not help solve the global imbalances by forcing the RMB appreciation. Based on stabilizing the global economy, and creating a stable monetary environment to adjust the global imbalances, big country economies should cooperate on exchange rate issue, and RMB’s stability is necessary.
The present study was commissioned by the 2010 Summer Davos project study group, and formed on the base of the existing research results from “The global financial crisis and the international monetary and financial system reform "(Grant No.: 09JZD0016) ,a major project of Ministry of Education launched by InternationalFinanceResearchCenter, NankaiUniversity. The study is hosted by Professor Liu Lanbiao from NankaiUniversity, and the main composers are Professor Liu Lanbiao and Professor Fan Xiaoyun, director of the International Monetary Research. The staff participating in this study include Professor Liu Chengfu, Associate Professor Wang Fangfu, Associate Professor Tu Hong, Dr. Liu Mingbo, Dr. Wang Bo, Dr. Xiao Lisheng , Dr Wang Daoping, all from NankaiUniversity.
The report examined the phenomenon of global imbalances in the context of financial globalization and differentiation of national financial development, and through theoretical and empirical analysis, it clarified two issues as follows. First, RMB exchange rate is not the cause of global imbalances, and RMB appreciation will not help easing global imbalances. Second, estimation of the equilibrium exchange rate of RMB, on the basis of taking into account global financial environment changes, show that the current level of real effective exchange rate has not been underestimated, but overestimated 10.94%, thus there is no reason for an upward adjustment.