[Feature Photo: SKB Institute Director, Prof Dave Fernandez spoke at the Chief China Economist Forum in Shanghai held on 5-6 January 2019.]
SKB Institute Director, Prof Dave Fernandez, spoke at the Chief China Economist Forum in Shanghai held on 5-6 January 2019. The forum brings together annually the Chief China Economists from across the financial sector to discuss the most important issues facing the Mainland, with this year's conference titled, "Facing the Challenges: China's Choice in the Superpower Game." As the title suggests, much of the focus was on China-US trade relations where many participants were hopeful of a "ceasefire" between the two countries during 1Q. Nevertheless, most economists expect depreciation pressure on the CNY early in the year, though the consensus was that USDCNY would be below 7 by the end of 2019.
Prof Dave spoke on "The Impossible Trinity and China's New Balance of Payments." In his remarks, he noted that the "trilemma" framework where countries cannot simultaneously pursue fixed exchange rates, open capital flows, and independent monetary policy, still afforded China's policymakers sufficient flexibility to pursue multiple policy goals. However, in bouts of global risk aversion, emerging markets that run current account deficits have come under considerable pressure, which is likely the BoP situation that China will face this year.
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