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Focusing On RMB Appreciation Game

2010/4/28 11:11:00 22

Since 2009, some western people have repeatedly focused on the "low exchange rate of RMB", constantly raising speculation about the RMB exchange rate "triggering global economic imbalances" and "inducing financial crisis". The issue of RMB exchange rate has become one of the most important economic and even political problems China is facing today.
　
The textile industry as a relatively high proportion of the export industry, affected by the appreciation of the renminbi, so the exchange rate issue has attracted the attention of all sectors of the textile industry.
　　
A game of appreciation
　
In 2009, the world economy gradually recovered from the financial crisis and showed signs of recovery. At this time, with the constant warming of Sino US trade frictions, some Westerners frequently talked about the RMB exchange rate and demanded RMB appreciation.
　　
When Obama visited China in November 2009 and referred to the issue of RMB exchange rate, he said: "in the next year, my goal is to let China realize that the appreciation of the renminbi is in their interest." In 2010, Obama and his government appeared aggressive on this issue. In March 11th, he delivered a speech to pressure China on the issue of exchange rate and hoped that China would accept the renminbi's "market oriented" exchange rate policy. In addition to the position of the US government, US Congressmen are also pestering the RMB exchange rate. In March of this year, 130 congressmen sent letters to US Treasury Secretary Geithner and US Commerce Secretary Luo Jiahui demanding tough measures to deal with China's exchange rate policy. The US business community also "talked" about the appreciation of the renminbi. George Soros, an international financial predator, said: "it is suggested that the appreciation of the Renminbi should be carried out once in a timely manner." Goldman Sachs has boldly predicted that China may consider giving the renminbi a one-time appreciation of at least 5%.
　
China's position is very clear in the face of the Western demands for RMB appreciation and reform of the RMB exchange rate policy, which is represented by the United States. On April 12th, when President Hu Jintao met with Obama in Washington, he stressed that the direction of China's reform of the RMB exchange rate formation mechanism is unwavering. This is based on the needs of China's own economic and social development. Specific reform measures need to be considered in the light of the development and changes of the world economic situation and China's economic operation. Especially not under external pressure. It is hoped that the two sides will properly handle the economic and trade frictions between China and the United States through equal consultation and jointly safeguard the overall situation of Sino US economic and trade cooperation.
　
Wen Jiabao, premier of the State Council, said at the beginning of this year that the value of the renminbi was not undervalued. He pointed out that according to the statistics of the exports of 37 countries to China last year, 16 of them exported to China. China has become an export market for neighboring countries, including Japan and Korea, and also an export market for Europe and the United States. In the extremely difficult times of the world economy, the renminbi has not depreciated, while the real effective exchange rate has appreciated by 14.5%. Chen Deming, Minister of Commerce, also pointed out that when the financial crisis had not completely passed, and the world economy even had two bottoms of danger, the stability of the currencies of all countries was conducive to economic recovery.
　
Appreciation will have multiple effects.
　
The game between China and the US on the issue of RMB appreciation is continuing. The expectation of RMB appreciation in the economic circles is also rising. The debate on the impact of the appreciation of the renminbi is also endless.
　
The impact of RMB appreciation on the economy is obvious. Some analysts say that appreciation can enhance the purchasing power of our country. Foreign goods are sold to us at a price of 22% off. In addition, China's investment in foreign countries or foreign assets will be cheaper than before. In addition, the appreciation of the renminbi may reduce the domestic inflation level by reducing the relative price of imported goods, curbing the inflationary pressure generated by the rise of international energy and commodity prices, and thus reducing the possibility of greater monetary tightening measures.
　
Some experts say that if the inflation driven by commodity price increases, the appreciation of the local currency is another solution. Although the rising exchange rate may damage the competitiveness of the export industry, import prices will become cheaper and reduce the pressure of imported inflation. Many scholars believe that from the perspective of anti foam, the exchange rate needs to be adjusted.
　
For China, a country with a strong dependence on exports, the negative impact of currency appreciation is also widely concerned. According to the relevant sources, the Ministry of Commerce and Ministry of industry and information technology are conducting stress tests on labor-intensive industries, hoping to find out the impact of the change in the RMB exchange rate on textile, clothing, footwear, toys and other industries.
　
According to the people concerned, the counterpart chamber of several labor-intensive products roughly estimated that the net profit margin of the industry will drop by 1 percentage points every 1 percentage points, while the average net profit level of these industries is only 3%~5%.
　
According to the analysis of textile industry experts, if we consider only the export volume of more than 50 thousand Textile Enterprises above Designated Size, and do not consider the factors of raising prices, we will find in the relative static model that the RMB will appreciate 1 percentage points against the US dollar. The net profit of these more than 50 thousand enterprises will be reduced by 5 billion yuan ~60 billion yuan. Taking into account the net profit level of 133 billion 100 million yuan in 2009, the impact of the fluctuation of the RMB exchange rate per percentage point on the net profit of the industry is about 4.5%.
　
At present, the average net profit level of the textile and garment industry is roughly 3%~4%. The profit margin of the slightly better enterprises is 5%~6%. If the appreciation of the RMB reaches 5 percentage points, it means that the loss of net profit of the 30 billion yuan above the scale enterprise exceeds the limit that the enterprise can afford.
　
The director of Economic Forecasting Department of national information center and Jian Ping, chief economic teacher, believe that the appreciation of RMB will increase the cost of exports in the short term, but the decline in import cost will also offset the negative impact of appreciation on exports. "We need a cycle to reflect the comprehensive impact of appreciation on imports and exports".