[Reprint], David: the rapid growth of house prices has to head the _ borderless space of thinking

Original address:, David: the rapid growth of house prices has to head the author: chaijing the face to face "video http://news.cntv.cn/program/mianduimian/20101121/103842.shtml program 1 memoir: the interest rates are likely to further adjust the November 19, the people's Bank of China announced that increases the deposit reserve ratio 0.5 percentage, which is already a year on major commercial bank reserve ratio of fifth upward. But in the people's Bank of China has carried out before, since the end of 2007 for the first time since, from October 20, by a financial institution 0.25% benchmark interest rate of deposits and loans. Central Bank of a series of actions of the continuous introduction of the community for the transformation of national monetary policy. As a member of the monetary policy Committee of the people's Bank of China, Li, David closely following the trend of China's monetary policy. Reporter: this time, the Central Bank's continuous presence currency tools some adjustment, whether the deposit reserve ratio or increases in interest rates, does that mean we now from loose monetary policy started restructuring?, David: as for this transfer does not transition to the final State will be. But I can see what? I can see is two things: first, the macroeconomic, now is the beginning of November, 2010 China's macroeconomic trends have stabilised, have stabilized, the growth rate has stabilized, so in control of the premium growth and inflation expectations this dilemma, control inflation is expected to rise to the main aspects of contradictions. China's economy is now a need to address the task is to change people's inflation expectations, which is expected to be stable population, do not expect a very high inflation. How to do it, you cannot rely on advertising, but also relies on policy, the kind of policy? properly raise deposit interest rates for deposits interest rates to fight inflation published by us. Reporter: but you see, now inflation rate is 4.4, we now deposit rate is probably still 2.5, so some say you reset also does not help, useless?, David: I don't think any of the policies, in particular monetary policy, the most important thing is to change people's expectations about a month ago, has been slightly increased the deposit rate, it seems to me that has to market participants, give people a clear signal to tell everyone that interest rates may be adjusted, there may be further adjusted, so don't worry to deposit moving. Such a signal has been released, as regards the second action when you want to do, I think this is the decision makers. 2 stock market now very healthy, David believes that currently more stable economic development in China, the appropriate adjustment of the monetary policy of the time, from moderate loose monetary policy towards appropriate prudent policies, through the interest rate, and a series of measures to reduce Monetary liquidity, is the control of effective means of domestic inflation. But as the market interest rate of the Central Bank is expected to increase in China's stock market has entered a substantial turbulence in the market. Reporter: I don't know if you noticed this week's stock market crash, media analysts say the market there is a panic expected, believes that the expected itself exacerbate the entire capital market declined, and what do you think?, David: today it seems to me that China's capital market is in a very healthy state. How do you speak? it seems to me that one of the most basic data is the price level in the history of the horizontal comparison, with our own history, horizontal, are not high. I'm talking about is the price-earnings ratio, but also our shareholders, in my opinion, much more mature than before. 50%, crude numbers are institutional investors, professional investor, professional investors than retail, more than shareholders. Reporter: you do not read Goldman Sachs published reports that suggested his client to sell all of China's stock, they are based on the opinion that the Central Bank's continuity caused by monetary reform raises interest rate expectations. The report of Goldman Sachs, David: worthy of respect, but after all, is a company of integrity. In my view, the movement of funds, in addition to the stock market, and not too much, the real estate is a social problem, the real estate prices higher, not likely to persist. Reporter: it seems that we see the stock market crashed, and fall. , David: the stock market we recently two weeks growth is faster, since any growth appears certain adjustments to the basic law, the stock could not have old rose, the basic law. So a certain degree of adjustment was inevitable. ��, David Tsinghua lecture scene �� 3 United States note printing was not deliberately targeting China, David 1992 to obtain a PhD in economics at Harvard University, long-term in United States and Hong Kong are engaged in teaching and research work, from 2002 began to be distinguished as Professor, school of Economics and management, Tsinghua University, and served as Director of China and the world economy. Last March,, David was appointed Governor of the monetary policy Committee. , David believes that China's economic transformation of critical period, the international economic environment has become increasingly sophisticated. 3 November, the Fed has launched a second round of quantitative easing, 2011 by the end of June in the United States purchased 6000 million long-term Treasury bonds, in the United States real interest rates close to zero, the Fed's decision amounts to a lot of printing banknotes injection of cash into the markets. Then, United States of such an approach would be to China and the impact that we have the press do?: because we have a lot of dollar reserves, will also be affected. So some people may think that United States such policies is deliberately aimed at China, how do you see?, David: I do not think that this policy is deliberately aimed at China. Last week I participated in an international forum for Clinton on the subject had a very deep in my view an interpretation. He said the United States to see Japan 20 years ago is so vibrant, so have the advanced technology, so have his self-confidence, today, after 20 years of recession and deflation in 20 years, becoming the Government has no leadership, no self-confidence, enterprises lack vitality, this is a very sad ending, he said we should try to United StatesAvoid the tragedy of Japan. Reporter: he thinks that the crux of this tragedy?, David: deflation, is the price of the overall decline. United States corporate cash right now is very abundant, but there is a lack of confidence, not willing to invest. United States Bank now has a cash and not lack of money, but because the United States banks themselves carry a heavy burden of unpaid bills, lanzhang, not afraid to invest, not afraid of the loan. If he does not solve the unemployment rate, high unemployment, it is possible to step into a relatively long period of slow growth. Or even negative growth stage, and once that happens, then the overall interests of the United States, they are absolutely unacceptable. Therefore this background to launch quantitative number of loose, in my opinion is in line with the strategy of the United States. Reporter: why do you want to emphasize this?, David: it must be clear, if you do not know how, like boxing opponent, the other a fist, we intended, you can't figure out how to respond to him? how can you then move? your next move would be wrong. 4 zombie banks United States launched the first round of quantitative easing monetary policy is from March 2009 onwards, the Fed-batch purchased 1.7 trillion United States Treasury bonds and mortgage-related bonds that United States policy in order to rescue the financial system from crash played an important role. In the United States, David, it seems that a new round of quantitative easing monetary policy, the main intention is to expand the investment and production to prevent deflation, stimulate economic recovery, but because the United States financial system problems itself, although good, final wishes to play a role may be relatively limited. Reporter: you said a Word, you said that the money can only be idling, skid?, David: is the current United States financial structure of such a pattern, it's financial institution, its banks carry a heavy burden of debt, or toxic assets, the height of his behavior. Although the present monetary conditions is very relaxed, a large amount of funds in the United States in the territory of present. But he is not willing to loan, he considered that in the United States credit risk too high. ? This part of the money was Fund, investment funds, hedge funds take away, take it to foreign countries. So the funds in the United States did not play a role in a go on the outside, this is the United States economy is currently one of the core issues. Reporter: do you have one of this judgment, which means that Japan 20 years of history that is zombie banks with cash is not direct investments?, David: Yes, the investment of no investment, this is Japan's recession one of the most basic mechanism. Reporter: the case for his country economy and a major boost to?, David: multiple currency in the United States and, to a limited extent, to a certain extent help him rise in asset prices, noting the United States Government, the Fed announced that quantitative easing, the day of the world, especially developed countries, the rapid rise of the stock markets, the rapid increase in stock prices on the United States economy in the short term is good, but the benefit is limited. Reporter: what do you have a Rogers said that concern, in particular, he feared that the central banks around the world and almost all are printing too much money. With this concern, David:. I worry about is what I worry about is the United States, Europe, they are the only Indian bank notes, tricks, and financial reform and subject to political considerations, mark, finally only printing banknotes, printed banknotes, bring the global raw material prices. The raw material price increases, on China's emerging market countries combat is the biggest because we rely more on raw materials, developed countries had already industrialized, urbanization, and the demand for raw materials than our small, so this thing really is, we should be worried about. Division's programs start again a United States banknote, China's foreign exchange reserves be how to?, David: of course makes the value of our investments will be shrunk in size, this is without a doubt. Hot money incoming, how should we respond?, David: the most important thing is to manage their own financial market, manage their own financial institutions. 5 dollar reserves will be affected by how much?, David believes that the new round of quantitative easing of monetary policy, although the benefits of the United States domestic limited, but it has the potential to damage the interests of other countries. United States to market into 6000 million, from an objective point of view would lead to a devaluation of the dollar, thus diluting the dollar as foreign reserves, national assets. For 25000 million foreign exchange reserves of China, will create an immediate impact. Reporter: because we hold a large number of dollar reserves, bought a lot of United States national debt, this case is limited by how much?, David: because the United States this liberal policies, is likely to bring United States domestic price increases, once this price increases, we invest heavily in the United States Government bonds market of the investment will shrink. Because we are investing in the countries most of United States bonds should be can't hook up with inflation. United States national debt is only a small part is linked to inflation, the vast majority are not linked to inflation. So it's inflation has come, and it gives us the interest rate is unchanged, the course will allow the value of our investments will be shrunk in size, this is without a doubt, this is, I think it's our people, our various policy makers are very worried. Reporter: do you think this would be great?, David: this effect depends on the inflation prospects in the United States, if the United States who had 3%-4% above inflation, I think the impact is very large. Because we buy in the history of the national debt, it shall be entitled to the interest that I read at most 4%-5%, except it's inflation to a 3%, 4%, or to a 5% on our influence is very big, very likely become negative return on investment. In the United States, David, a new round of quantitative easing monetary policy will give our foreign exchange reserves have no small losses, for which we can propose to the United States. Reporter: purchase this part of the United States national debt, should also be relatively large absolute base, if you like what you said a negative return, it was a great loss. , David: is a bigger lossI think this is all the researchers or Chinese people are worried about. What should I do? I think need to speak to the United States, clearly this truth. You see, you had a loose monetary policy, if once you loose monetary policy purpose, for example, deflation, inflation are avoided. For the United States economy is to avoid the worst outcomes, very good. Then you should make this a successful policy stakeholders, namely China, to compensate for certain losses? some way compensate certain losses? reporter if he would think that I now account for active status, I was unable to compensate you or I decided not to you, you can do?, David: so, first, the argument clearly, despite my strength as you, I know you can cheat, we come to understand that while we think of a way, can not be able to out corresponding, coping strategies, and also of some should have. For example you buy in your United States State bonds, and I can sell part of your printed jiqianyi of dollars for State bonds, you buy, the certainty in the short term will enable the relevant is the part of States to buy bonds price will rise. Well, if I happen to have been in the hands of your state bonds, I sell, you don't need me anymore, anyway you can buy printed banknotes, two months ago I spoke to the Fed officials exchanges, I as a scholar comunicate, if China is to sell part of the State of the United States Federal Reserve notes, what you do. The Fed's senior officials to speak to us, we will be very angry, and his answer. Reporter: why is he so angry?, David: he is angry because we make trouble, we brought instability. Today the situation is different, we are also very angry, and your own printing money to buy State bonds, you don't need me anymore, of course I can sell. 6 fear is the sauna after a cold bath in addition to the possible dilution as dollars foreign reserve assets of the country, the United States a new round of quantitative easing by another direct consequence is the generation of large amounts of hot money, but these hot money will flow into the emerging countries, including China, triggering inflation. Reporter: these hot money going to the Chinese economy then how much?, David: what is the hot money, hot money is speculative money, so a lot of speculation in the Chinese economy, money, he didn't make it clear that he did not know that China is investing in two months, or investing half a year or a year, investment or investment in five years. He never wanted to know, on the situation in China is not likely to see very clearly that we ourselves are not clear, foreigners even see clearly. So if our own financial situation, the economic situation has signs of instability, cold money becomes hot money, if China's economy, China's finance is stable, then the hot money coming in after that discovery, hot money will become cold. Reporter: but you like now if the central bank interest rate, the interest rate is not a is more encouraging hot money in?, David: the interest rate adjustment of this slightly, for real hot money, the attraction is limited. Reporter: how?, David: as hot money, hot money, it is only a speculative money, he's looking for one year is 1% return, is a 10% return, is a year to 10% is worth it. Your interest rate plus zero point number, for the attractiveness of hot money is negligible. Reporter: we now see a number, do not know if it's not true, that is to say approximately 6500 million dollars of hot money now build-up in Hong Kong, waiting to enter the Mainland and overseas media also said that there are 73 billion dollars of hot money in the Mainland of illegal foreign exchange transactions, sounds like a shocking. , David: the numbers I think whether it is right or wrong, but there are some basic points to clear because China is a large scale economies, the most important thing is to manage their own financial market, manage their own financial institutions. Reporter: many people will find it very strange that this time there is a lot of hot money coming in, you have to say I take home care of it?, David: I think the biggest Chinese economy, it is necessary to avoid a risk is systemic financial risk, because our currency stock is already a world record by record. Because only the things well, can we fundamentally to eliminate hot money the impact on us. Why? because hot money blow after all?, is afraid of him to fear that the withdrawal in case you go, you walk, you will have the economy in a cold bath, sauna with a cold bath. If we put our own market management, its price is not a steep learning curve, then running dynamic funds is significantly reduced. 7 most fear is the capital of the dammed Lake, David believes that, faced with the impact of the international hot money, we most need to be aware of is to prevent systemic financial risk, as the current stock of China's currency is the money supply has exceeded 10 trillion, ranking first in the world, especially in recent years in response to the international financial crisis, to implement the appropriate loose monetary policy, leading to rapid money supply growth, increasing systemic financial risk, which is also the most worrying thing, David. Reporter: sounds, such as the 10 trillion of monetary aggregate, sounds is a pleased figures, feel our countries have money available?, David: but its negative influence? it's deposit form is relatively stable. Reporter: why?, David: it is ready to be realised, ready to be converted, it is not like stocks, also do not like the automobile, but also not as fixed assets, it can be changed at any time of the form, you can at any time, from the Bank or from the people of the child following carry out mattress to buy things, if a large number of out of the banking system is a shock to the entire economy is affected. Reporter: do you worry about what?, David: fear of so much of the money stock, or from the banking system to quickly run out, the impact of product markets, prices, second possibility so much money, even a small part out of the banking system, access to capital markets, regardless of the real estate market or stock market, will bring short term asset pricesRising rapidly, it cannot be asset returns, the potential return on the support, so it would certainly bring about a rapid decline in the price, or call it bubbles burst. A third risk is? so much money, if improperly managed, it can rapidly over a short period of time, leaving out the people's Republic of China, the risk is big. For example, such a high amount of money, just like the US after the earthquake, seismic Lake: Lake formed a high and low water level of the outside, the stock of foreign currency is relatively low, so a high water level, if a short diversion control improperly, quickly, and it could be disastrous flood disasters, water levels decrease rapidly, the rapid flow of funds, the water flow away quickly, will impact the stability of our economy. Reporter: is also not see a lot of money off of signs, why the need to worry about it?, David: you want to worry about is the future of the phenomenon may occur. The probability of occurrence is small, but once there, the consequences are catastrophic. Reporter: what is it?, David: should we see fewer? 80 's Latin America recurring capital outflows, capital flight, first from overheating, first the global financial community on Latin America, large influx of funds, liquidity. Suddenly not optimistic about the outflow of funds. The 1990s began from Thailand Thailand, Southeast Asia, Russia's financial crisis, a United States person's financial crisis is not inherently? three years ago, everybody a rosy, the systemic risks that United States, United States of financial innovation to a large extent, the increase of financial system of self-regulation, does not need to be fed, does not require Governments to monitor, two years ago we see very clearly, the massive, rare in the world, a rare systemic risk. These lessons we should remember very clearly. China's economy, other errors can commit, this error must not be committed, the toss is toss. 8 our money that go?, David believes that the prevention of systemic financial risk to the long-term economic development in our country are facing challenges. He suggested, then we can adjust our loose monetary policy, slowing the growth rate of money stock, in addition to this, there should be ordered to the Bank's deposit Guide. Reporter: you said that want to put your money to boot it, you let it go?, David: the need for the development of capital markets, the stock market to expand, through the expansion of the stock market, funds gradually progressive approach. Also be ordered for capital investments abroad, provided that the orderly, controlled, and gradually phased investment abroad. Reporter: but go abroad to invest on the residents, or one can hardly imagine. , David: mechanism already have, but there is no comprehensive, systematic, it is worth study, go to gradually let people more investment channels, not just from A unit of the Shanghai and Shenzhen stock market investment for money, you can go abroad to invest, through investment in our trade partners of financial instruments, to gain access to China's economic growth of a return, this is promising. 9 our real estate market is a freak on, David, at present, China's population of investment channels also relatively single, stock market, real estate market is attracting a lot of money for a long time of two pools, however, house prices rise in recent years, the real estate market madness is not working properly, the capacity of absorption of funds has been relatively limited. National Bureau of statistics released data show that the month of October, national 70 cities housing prices rose 8.6%. And because of the existence of price increases are expected, many people think that China's housing prices will rise significantly. Reporter: but we now hear the voice is, Beijing's housing prices will have risen to almost with the New York Times will stop. , David: If our house prices rise to New York that level, that would be a nightmare, my personal observation, China's real estate market, especially the large cities of the rapid growth of house prices, so that the matter over. Reporter: head?, David: header, will not be like the past crazy up, so a game for everyone. Policy makers have been determined, people complaining. Reporter: three years ago, I interviewed some of the leading real estate companies, they have told me that they already make money earned gripped, but until now they earn is more more money, because they think this is a market economy, there is no way to market. , David: you cannot fully so, indeed, our real estate market so far is a market mechanism, this is a fact. But we must realize that our real estate market is very strange. Reporter: you mean what?, David: three things leads us to the real estate market is a freak. First thing, local government controlled land transfer to auction. And local government, an important source of revenue is the transfer of land, the world is rare. The second strange place is the Chinese economy, monetary and stock at very high, so much money stock for investment, promote the real estate prices. The third thing that Chinese people 2000 years of feudal land and cultural traditions, not just those two things? one son, one House, right? thus we see China's real estate market, on the face of it is free, but housing prices unreasonably high, the prices high, behind some not-so-good, relatively strange requirements. 10 must have a thorough and tax reform, David believes that it is precisely because the real estate market there are many anomalies, causing the prices high, in order to resolve the dilemma of house prices, you must rely on Government top-down reform. , David: the Government must be reformed. Reporter: you mean what?, David: it is necessary to establish a new real estate management system, this new system is the market organic combination with government intervention mechanism. Reporter: we do not already have the Government's intervention? this policy has been in existence for many years. In fact, David: no, in fact our interventions are saying that that was not implemented to the letter, and why? because local government interest and not inTo control prices, local government but also by high prices to further land auctions, so I said that our market economy, market economy, the real estate market of non-market economy, the root cause of non-market, you are in the market at the end of the market mechanism, and, of course, is a complete mess. Reporter: local governments are very reluctant to do so, I now revenue so much, you want me, but I'll give you the benefits that the city is doing, and where did the money come from?, David: Yes, so the core of the problem is to conduct a thorough, comprehensive, systematic, the local government and tax reform cannot be forced to sell land to live on land revenue up economic development and local government his legitimate and reasonable economic development funding requirements, should be from a legitimate, normal, including the Central Government to share revenue sources, this is the crux of the problem. It seems that only the, David from the financial and taxation system reform, completely change local governments rely on land sales development in the economic situation, to fundamentally solve the problem of housing prices. While the current implementation of differential mortgage policy, and other control measures play a role but relatively limited. Reporter: you said two suites and 3 suites of reform palliatives, others will think you are too pessimistic? this tight enough?, David: very simple, because the second suite, triple suite of reform only short term control requirements, just short of the demand side has been tightened, this thing does not change people's expectations, many people said that house prices will rise, you do not adhere to this policy, local government interest or land sales prices low, local governments must worry, this is expected to be very reasonable, that is the crux of the problem. What is lacking is deficient, a reform of the operation. Reporter: can you briefly describe your ideal what operation?, David: two things, first, the local fiscal reform, cannot ask the local Government of brittle get matching funds to state if you have anything to do in local government, directly to the money. The second reform? is the real estate itself, encouraging local government, allows local governments to use capital markets to finance, took the money, and then take out their own land for development, the development of house property right owned by a local government, do not immediately get out of the sale, in accordance with the principles of the market, and mobilize the community and mobilize the netizens to oversee the allocation, assignment, what to whom, to what to rent, the public authority. Reporter: there is a voice said, but he let local governments for a profit-making manner, what is the difference?, from real estate make money?, David: completely different, why because the profit from the sale of land to be short-term behavior, and today sold very enjoyable, a piece of land at the lot, billions will take home and do whatever you want, this is a short-term behaviour. Any Government, let me when government officials, I will do it, I would also be interested in. But if you get this to market financing, to hold land, long-term development, behavior change, it is a long-term management process, it's this way, it's this House, developed by the way, can not be able to House tube better, can contribute to local economic development, will not be able to pass the Government control of the House to attract talent, to enter this area, this test local government long-term management of basic skills, but also changed the behavior of the local government, from the pursuit of short-term economic growth into the pursuit of long-term stable and healthy development. 11 exchange rate is a great of misunderstanding, 11-12 December, 20 G8 Summit held in Seoul, Korea, the United States at the Summit, the introduction of quantitative easing by the accused in many countries, in addition, the Group of twenty is also clear that does not support the United States is RMB to put pressure on China. , David believes that, since the financial crisis, the United States has repeatedly accused against the RMB exchange rate, China is purely political needs of the United States. Reporter: as Obama has always said he took it that the renminbi is seriously underestimated, he believed that the Chinese Government has spent a lot of cost to intervene in foreign exchange markets, to ensure that the weak, he felt, no matter what, you should transition to market-based exchange rate mechanism. , David: this is a great misunderstanding? Reporter: how to speak. , David: his mind think that as long as the exchange rate appreciation can be huge, from 1: 6.8, rose to 1: 4, for example, China's exports will decline in China's trade surplus would fall, the model is wrong, wrong, this requires us to explain to him why? let's step-by-step reasoning, a few steps to launch. If the exchange rate appreciation is massive, from 1: 6.8 turned into a 1: 4, the consequences are? consequences is our portion of a loss of export-oriented enterprises. But then big losses he insisted. It is not possible because of the short, short your exit devices have a short-term investment, your workers already employed, you must produce, and the United States people around the world, in the course of a year and a half years and not find alternative suppliers of manufacturers in China, in the short term is unlikely to go to Malaysia, Indonesia plant, so the short term this huge appreciation can only rely on our exporters to export price elevation, this way the appreciation of the burden to consumers in the United States, what is the final result? foreign trade surplus is not significantly down, but we sold abroad in the price of the product, but make the United States of inflation. Unemployment, buy Chinese of the United States in the low-end product family life more difficult, not to everyone. , David believes that contribute to the appreciation of the RMB too quickly, and the United States Congress resulted in the end. And, through changing production methods, the adjustment of economic structures, China's trade surplus with the United States has been greatly reduced, which in itself is on Sino-US trade relations between the great contribution. This year, David: the foreign trade surplus, according to projections should be fully able to drop to below 4% of GDP, the trade surplus had before the crisis, as high as 9% in two years, down. In absolute figures, this year the foreign trade surplus is likely to decrease to $ 1800. Reporter: this drop description?, David: description? our domestic demand is rising, we export enterprises in the DepartmentMinutes, turning from export sales, this is our contribution to the world economy. This thing to talk with foreigners over and over again. Reporter: If the situation like you said, use common sense can explain, United States of decision makers what do not know this?, David: United States policy makers need for United States domestic political topic, this is another simple but, even if he knows the truth, he is not willing to admit the truth. As for United States citizens, he didn't just Let's say 5 minutes to explain, there are five minutes he would not have the patience to listen to, he'd rather watch two minutes of advertising, look at the two-minute television show that he is not willing to listen to this stuff, we this thing more tedious, and who are willing to listen to this topic. Reporter: but this is not a matter of interest to you?, David: people are willing to listen to 30 seconds, the Renminbi exchange rate is too low, so the export, robbed our work, finished, go home, this is the United States were superficial democratic politics, and simple, the game does not play, who will play. Therefore, former President Bill Clinton last week at a time Forum, he repeatedly told repeatedly stresses a reason, after I talk to him face to face, he said: I now do not need to run for any government posts, I can tell the truth, I should put the question to our United States United States people thoroughly explain that our financial crisis can not blame China, primarily our own making, tell the truth, the truth, what is the reason, he stepped down, he has expired, he need not campaign. You Obama on stage, he could speak the dialect? then simple however. In the face of it, David, United States and other Western countries, China should maintain a clear understanding of, and in particular should learn from the lessons of the Yen's appreciation. September 1985, Japan and the United States signed a "Protocol", promises square Yen dollar. After the signing of the agreement to three years, the yen had appreciated against the u.s. dollar has doubled, but Japan was once the economic bubble burst into the economic crisis, Japan economy so far hasn't been out of the shadow of the crisis. , David: I think China should adhere to the principle that we should not be tolerated, and should not allow renminbi appreciation too quickly, the gradual, controlled appreciation, but also to their own economic situation, the needs of economic structure to the target. You cannot say you outside I l I l. So, once you form a vicious circle, the consequences would be unthinkable. You have my appreciation I-l, l, the trade surplus down, you also make me up, that is, Japan's mess, after 1985, tragedy. Reporter: their result is 20 years of economic decline. , David: so, the strategic interests of the United States is to prevent Japanese recession, not deflation, as far as China is concerned, the strategy is to avoid the appreciation of Japanese type of passive, appreciation can, but I am not passively appreciation, I cannot be your led by the nose. Our international the truth clearly, at the negotiating table to reason clearly, and to take measures actively restructure the economy, two or three years, the trade surplus down. To that time, you could say? United States one can say, so my point is not followed by United States people play the game. 12 China economy like a 16-year-old's Yao Ming in the international financial crisis, the world economic situation are quietly undergoing change. As emerging market and developing countries, the rapid rise of China in the world economy of the stage play an increasingly important impact. , David believes that the more we are in this way, we need the spirit of learning. Reporter: you repeatedly reminded this sentence, you said that China is a bit like a 16-year-old Yao, do you mean?, David: I think we are the financial crisis, China's economy is financial crisis suddenly onto the stage, we are not ready, just like the 16-year-old Yao Ming, one meter of height may 9, two metres, on the surface, is a very good basketball player, is not ready, easily hurt, not muscles of the body harmony, underdeveloped, self protection awareness is not strong, basketball's rules read clearly, unspoken rules do not understand, this is our situation. Reporter: but we see that the Bank's Governors have a suggestion, that is to establish a new integrated monetary system, for instance, the Renminbi, the euro will be placed in one of the more important international status?, David: our full internationalization in the short term, conditions are not ripe. Internationalization requirements your money fully liberalized, freedom of movement, but we are now in the capital markets, financial institutions are not perfect. Short-term funds are fully liberalized, very likely massive outflow. High monetary stock of systemic financial risk, in my view is that China's economy over the next ten years, twenty years, we must strictly observe the bottom line. Reporter: but some people think that you will not be too pessimistic. , David: I think the economics of a task is in particular optimism, don't see the risk, wish to remind everyone. reminds that this is an important economic research in the line of duty.