RMB Appreciation Exceeded Expectations, Pressure On China'S Clothing Exports Doubled

The exchange rate of RMB against the US dollar is like a runaway wild horse, which is rising faster than market expectations.

In February 21st, the central parity of RMB against the US dollar broke through the 7.15 pass, and the quotation was 7.1503, a new high.

At this point, the central parity of the RMB against the US dollar has broken through the four largest integer pass, and the pace of RMB appreciation has accelerated significantly. The cumulative appreciation has reached 2.16% this year.

The appreciation of the renminbi has made many labor-intensive export enterprises feel pressure.

Earlier, the import and export data released by the General Administration of Customs showed that China's trade surplus reached 19 billion 490 million US dollars in January 2008, an increase of 22.6%, and the growth rate slowed down.

"Anyway, the deterioration of export environment in the past 08 years has become an indisputable fact."

Pan Xiangdong, a macroeconomic analyst at CITIC, said.

The recent rise in the renminbi has been accelerated. Since February 15th, it has broken through 7.18, 7.17 and 7.16 three passes at a rate of one day.

Nearly 5 trading days rose 500 basis points, showing an accelerated appreciation trend.

Compared with the increase of 6.9% last year, it only reached 2.1% appreciation rate in 31 trading days.

Earlier, JP Morgan said in its report that this year the renminbi is expected to achieve a 10% appreciation in the larger fluctuation range. Standard Chartered Bank also predicted that the appreciation of RMB against the US dollar would be 9% this year.

At the current rate of appreciation, the bold assumption that the US dollar broke through 6 to 1 against the central parity seems to have been completed at the beginning of the second quarter.

For reasons for the recent significant appreciation of the renminbi, central bank governor Zhou Xiaochuan said at a meeting of the bank for International Settlements in Basel, Switzerland, 7, that global oil prices, domestic inflation and huge domestic trade surpluses were part of the recent appreciation of the renminbi.

Shen Minggao, chief economist of Citibank China, pointed out that in order to curb the rising inflation of non food prices and accelerate the appreciation of the renminbi, the acceleration of inflow of foreign capital will further drive the appreciation of the renminbi.

As soon as the renminbi runs fast, the export trade has a fever.

Referring to the recent RMB exchange rate, Zhou Zhonglin, owner of a leather shoes export enterprise in Jinhua, Zhejiang, called "crazy."

"Business can't be done, it can only be closed."

Zhou Zhonglin said with great reluctantly.

Research data show that the RMB appreciation of 10 percentage points, the growth rate of exports should be slowed down by 3 to 4 percentage points in general. Therefore, every import and export enterprise has tightened nerves on the appreciation of the renminbi.

The industry believes that appreciation can promote industrial restructuring, but for labor-intensive export enterprises, it is no doubt a huge test. Textile and footwear industry is an important member of labor-intensive industries.

Fan Min, chief analyst of China's first textile network, told reporters that the profit of shoe companies dropped by 1 percentage points as the appreciation of RMB increased by 1 percentage points. The profit margin of textile and garment industry will drop by 2 percentage points.

Up to now, the exchange rate has appreciated more than 13%, and the profits of enterprises are getting thinner and thinner.

A survey conducted by the TDC commissioned by the Foreign Economic Research Institute of the national development and Reform Commission also showed that 62.7% of the enterprises surveyed in the Pearl River Delta enterprises were able to bear an increase of less than 10% yuan.

As the renminbi is likely to continue to appreciate, its pressure on production cost will also increase.

The pace of slowing export trade was further determined in 2008.

The latest figures released by the General Administration of Customs show that in January, China's foreign trade exports amounted to 109 billion 660 million US dollars, an increase of 26.7%; imports of US $90 billion 170 million, an increase of 27.6%, and a monthly surplus of US $19 billion 490 million.

Among them, general trade imports and exports amounted to 97 billion 550 million US dollars, an increase of 37.2%, and the import and export of processing trade reached US $81 billion 850 million, an increase of 15.8%.

It is understood that last year the total value of foreign trade and import and export in China exceeded US $2 trillion for the first time, reaching US $21738 billion, an increase of 23.5% over the previous year and a net increase of US $413 billion 400 million.

But in fact, in 2007, although China's foreign trade maintained a rapid growth of over 25%, the export growth rate slowed down from August 2007 and remained at about 22% for 5 consecutive months.

Last year, the Ministry of Commerce and the relevant ministries and commissions jointly issued a series of policies to reduce export rebates and impose export duties, and at the same time increased the adjustment policies for processing trade, which all became the internal reasons for the reduction of China's export orders.

In addition, the correlation between China's economy and the world economy is getting stronger and stronger. China's foreign trade enterprises bear the brunt of the downturn in the US economy.

By observing the relationship between us economic growth and China's exports over the past 10 years, China's exports to the US will drop by 6.2% when the US GDP decreases by 1%.

"The scale of trade surplus will continue to expand, but the growth rate has dropped."

Mei Xin Yu told reporters.

He further analyzed that, because China's export base is far greater than the import base, and the root cause of the surplus is our country's processing and assembling status in the international industrial chain, the exuberant demand of the international market and the increasing competitiveness of China's export products. Our export scale is larger than that of the import scale, and the pattern of trade surplus is difficult to change in the short term. The trade surplus will continue to exist for a long time in the future.