Appreciation Of The Renminbi Will Hit The Textile Industry

The mainland media estimates that once the RMB appreciates, the export profits of China's textile industry will decline to varying degrees.

This may lead to many small and medium enterprises that rely on low value-added products and low price competition to escape bankruptcy. At the same time, there will be one hundred thousand unemployed workers.

The Hongkong Press quoted the mainland media assessment that once the RMB appreciates, China's most sensitive textile industry, real estate industry, financial industry and energy industry will bear the brunt, especially the textile industry.

According to preliminary estimates, the value of textile exports has declined to varying degrees in each appreciation of one percentage point.

Among them, the cotton textile industry has dropped by twelve percent, the wool textile industry has dropped by eight percent, the garment industry has dropped by about thirteen percent, and the higher the dependence on exports, the greater the loss of the garment industry.

More experts believe that if the RMB appreciates three percent, the export of textile industry will probably drop by thirty percent.

Many small and medium enterprises that rely on low value-added products and low price competition will not be able to escape bankruptcy. Meanwhile, they will bring about one hundred thousand unemployed people.

Because Chinese textile enterprises are mostly middle and low income employees, once they lose their jobs, they will cause other social problems.

In addition to the textile industry, experts believe that the appreciation of the renminbi will make the real estate industry adjust to the huge pressure of hot money.

Because international hot money has long been living in the mainland real estate industry, part of it is betting on RMB appreciation.

For the financial sector, the biggest risk of exchange rate changes comes from the possible depreciation after the appreciation of the renminbi.

According to expert analysis, the initial financial industry has little impact on RMB appreciation, mainly from the shrinking of core capital and the increase in bad debts of foreign trade enterprises.

The core capital of Bank of China and CCB includes US $forty-five billion in foreign exchange reserves, and the appreciation of RMB will be more severe.

Other banks' core assets have little foreign exchange and less obvious impact.

But after the appreciation of the renminbi, a large number of hot money will run away after the target is reached. At this time, people's currency is facing the risk of devaluation, which will greatly hurt the financial industry.

Experts suggest that foreign trade enterprises should change their survival strategies, increase the added value of products, and no longer attract overseas markets only with low price advantages. At the same time, banks need to develop more financial derivatives for exchange rate avoidance, such as foreign exchange forward business, which will lock down the risk of foreign exchange floating through these businesses.

Another important countermeasure is to accelerate the development of direct financing channels, and direct financing can disperse the market risk when hot money is drawn away without affecting the banking system.

As for the energy industry, experts believe that if the appreciation of the renminbi ranges from five to ten percentage points, most enterprises in the short-term electricity and coal industries will not have a significant impact, but the oil sector's molecular industry will be significantly affected.

Because the dependence of the mainland oil market is relatively large, the market price will change with the change of international oil price. The appreciation of RMB will directly lead to the decline of the crude oil price of petrochemical companies, and the high profits of crude oil extractive enterprises will be squeezed.