Why is it difficult for China to achieve exchange rate freedom in the next 100 years?

1. The core reason: We are a country with high savings, high real estate, and high external debt expectations.

Once completely free-floating and unrestricted:

- The wealthy in China would frantically exchange for US dollars.

- Capital would flee on a large scale.

- The exchange rate would plummet instantly.

- Housing prices, the stock market, and the bond market would all crash together.

This is not speculation; it's the common outcome for all developing countries that liberalized their exchange rates.

2. We are not yet at the stage of "withstanding the shock."

Developed countries can have free-floating rates because:

- Capital is a net inflow.

- Their currencies are global reserve currencies.

- They are capital-exporting countries.

We are:

- A major manufacturing country.

- Prone to capital outflow.

- The Renminbi is not yet a truly international currency.

Complete liberalization = opening the city gates to let the flood rush in.

3. Once the exchange rate crashes, the entire economic chain breaks.

- Imported crude oil, chips, grain, and metals all become more expensive.

- Domestic inflation would explode directly.

- Corporate external debt would blow up.

- Ordinary people's wealth would shrink.

A stable exchange rate = a stable economic foundation.

This is the bottom line; it cannot be touched.

4. It's not "control," it's "managed floating."

Our current model is:

- Letting it fluctuate freely under normal circumstances.

- The central bank steps in to stabilize it at critical moments.

This is called mature and pragmatic, not backward.

Compared to the Ruble:

- The Ruble is locked down hard behind closed doors.

- We have flexible management, smooth external circulation, and sufficient reserves.

Completely different things.

5. It will definitely be gradually liberalized in the future, but it cannot be rushed.

The order must be:

1. First, strengthen the economy.

2. Then, promote the internationalization of the Renminbi.

3. Finally, liberalize the exchange rate.

Doing it all at once = suicide.

Most concise summary

The exchange rate of developed countries is a "moat," our exchange rate is a "flood control dam."