Dear Mr. Trump,

Dear Mr. President，

Please allow me take your liberty to discuss the issue ofthe exchange rate of the RMB to US dollar.

请允许我与您讨论一下人民币-美元汇率问题。

During the election campaign and after your victory you havementioned that you would push China to appreciate the value of the RMB. I thinkthis might be big issue in the US-China relation.  Frankly speaking I don’t think you can getany positive result.

在这次选举中以及您胜选之后，您都曾经提到过要推动中国对人民币升值。我认为这是中美关系的一个大问题。坦率的说，我认为您难以得到任何正面的结果。

I do not want to ague in length that the US trade deficit isnot because of the exchange rate, in this regard, I just want to remind youthat US has trade deficits with almost every its major trade partner. Forexample, the US have a long deficit record of the many years with Canada, evenno single month without deficit. But you do know there was no any exchangeproblem there.

在这里我不想长篇大论来说明美国的对华贸易赤字是因为汇率而起，我只需提醒您美国几乎与她的每个主要的贸易伙伴都有逆差。比如美国与加拿大有一个很长的逆差记录，而且是年年月月都是逆差，没有一个月例外。但是您知道的，这里毫无汇率的问题。

Nor I’d argue that the reason of the deficits is in thestructure of the US economy. This is also need a lengthy discussion. But in onewords, it is the cost of world hegemony.

同样我不想争论这种逆差的原因是美国的经济结构出了问题。这也需要很长的篇幅。但是可以用一句话来概括：这是霸权的代价。

I’d like suggest we should find out a scientific and objectivecriterion to judge whether the exchange rate is in good shape.

我宁愿建议我们应当寻找一个科学的客观的标准来判断汇率是否正常。

I know quite a large number of economists insist that therate is determined by the market, and refuse to do a research on it. That’slike the ignorant young man who eats when he hungry and eats what he likes.  That’s the so called natural way, I wouldlike to say, it is a primitive way.

我知道有很多经济学家，争辩说汇率石油市场决定的，而不肯作进一步的研究。这其实就是一个不懂事的年轻人，说我饿了就吃饭，想吃什么就吃什么。这就是所谓“自然”，其实是原始与无知。

I do think the economist community owns the society such atheory. Economists, as scientists, should be able to explain, and provideguidance to, economy activity.

我的的确确认为经济学界欠社会一个汇率理论。经济学家既然是科学家，就应当奴隶解释经济现象并提供指导。

In this field we only have the PPP,Purchasing Power Parity. But it is good in comparing the living standard indifferent countries, and not so good for exchange rate which is related tointernational trade. Because PPPconsiders the money value from the point of view of end consumers, and anygoods when it comes to the consumer’s hands there must considerable transactioncosts. These transaction costs differ sharply from developing country todeveloped country, so the PPP must overvalue the currency of the developingcountry.

在这个领域我们只有个PPP，他虽然对于比较不同国家的生活水平有用，但是却不适于解释汇率。因为PPP是从最终消费者的角度去考虑货币的购买力。而任何商品要达到最终消费者的手中必然要经过许多交易过程，这交易成本在发达果胶和不发到国家之间有很大的差异，这就使得PPP高估了发展中国家的货币（相对于国际贸易而言）。

I have put forward a formula of exchange rate, and discussedit with many established scholars including quite a number of the Nobel laureates,for example the out spoken Dr. Paul Krugman. They did not have a single word ofobjection.

我曾经提出一个汇率的公式，并且与许多著名的经济学家讨论过，其中有好几位是诺贝尔奖得主，例如就有大嘴巴的保罗·克鲁格曼。他们都没有提出任何反对意见。

I believe, if someone of them had a good reason to say “NO”,he or she would have not hesitated to teach a lesson, because teaching is theirnature.

我相信，假如他们中间哪一个认为有站得住脚的理由反对我的意见，他就会毫不犹豫的给我上一课，因为这是学者的天性。

Of course no one of them likes to take this hot potato. Itis too hot an issue in the States. However if you, the President of the UnitedStates ask them to provide a theoretic opinion they would do their job.

当然他们中间也没有谁愿意借这个烫手的山芋，在美国这个问题是在是太烫手了。但是，过您，美国总统，要他们提供学术上的意见，他们就会做他们该做的工作。

My idea is like this:

Take as much as possible the products the concernedcountries can produce with similar standard, use the two moneys calculate thetotal value of the big sum respectively, then the ratio of the two sum valueswould be the expectation value of exchange rate. The real exchange rate should fluctuatearound this expected value.

我的这个想法是：

选取两国都能生产的产品的总量，分别用两国的货币来计算这个总量的价值。这两个价值的比值，就是汇率的期望值。

Put is more exactly, the expectation value of the exchangerate R,

写成数学公式就是

                      R1-2=Sum2/Sum1;

Sum1 is total value of the selected goods calculated withmoney of the first country and the price in the first country,

Sum 就是选出的东西用第一个国家的货币计算的价值。

                      Sum1= ΣViP1i,

                       Sum2= ΣViP2i

Where, index i runs from 1 to N, for the N kinds ofproducts, Vi, the total volume of  i-thproduct both country produced in the specific period; p1i,  the price of i-th product in country1; In  the case of USD to RMB, it is the price in USand in USD, while P2 is the price in China in RMB . So Sum1 is the total value inUSD of the chosen products that the two countries produced. Similarly Sum2 isthe value of this lump sum in RMB.

这里下标i 从1 到 N，N是选出的产品的种类数目；Vi，是第i种产品的数量，两国在一个特定的期间生产的的总数；P1i，第i中产品在第一个国家的价格。在我们讨论的美元兑人民币的场合，就是买美国的以美元计价的价格，P2就是在中国的以人民币计价的价格。

Had the PPP evaluated from production side and take intoconsideration of those products that the two countries can produced with thesame quality standard, it would become to mine.

假如PPP的计算是从生产的角度而且考虑大量的两国都能生产的商品，那么它就与我的概念一致了。

Here the words “from production side” means use thefactory gate price, while PPP uses the retailer price to the final consumer.However since the exchange rate is for international trade, maybe some otherprice close to this trade more suitable.

这里“从生产角度”意味着使用出厂价，然而PPP使用的是对最终消费者的零售价。

What kind of product, and what kind of price should be taken,are subject to academic discussion. There are still rooms of dispute, however it shifted from sentimental quarrelto  reasonable discussion, and mayproduce positive result.

应当选用那些产品，应当使用什么价格，这里还有很大的讨论的余地。然而这样我们就把会的争论从感情冲动争吵印象理性的讨论，因而会产生有益的结果。

I appreciated your idea of “achieve a stable, peaceful worldwith less conflict and more common ground”

我很欣赏您的外交理念，“实现世界的和平与稳定，少一些冲突，多一些共同的基础”。

In doing so, I think you would agree, maintaining sound workrelation with your partner of China is of vital significance.

为此，我相信您会同意，与您的中国伙伴保持良好的工作关系非常重要。

Thank for listening.

Sincerely yours,

Yankun Chi