RMB Appreciation, Shoemaking Enterprises Are Under Attack

With the release of China's May export figures and the latest US trade figures, the RMB exchange rate has once again become the target of some US economists and politicians.

On June 16th, Levin, chairman of the US House raising Committee, said that if China did not quickly increase the value of the renminbi, Congress would pass legislation to force it to adjust the RMB exchange rate.

As a result, with the expansion of the US trade deficit with China in April, the "appreciation" of the renminbi continued to disappear.

May export figures bright

In May, China's imports and exports totaled 243 billion 990 million US dollars, an increase of 48.4%, and the trade balance reached US $19 billion 530 million, the highest point in 7 months.

Data released by the Customs General Administration on 10 may show that in the first 5 months of this year, China exported 567 billion 740 million US dollars, imported 532 billion 350 million US dollars, and the trade surplus was US $35 billion 390 million, of which China's import and export value was 243 billion 990 million US dollars in May, a 48.4% increase and a trade surplus of US $19 billion 530 million.

It is worth noting that in April, China's trade surplus was only $1 billion 680 million, and in March it was a deficit of 7 billion 240 million US dollars.

Shanghai customs 17 released the first 5 months of this year, Shanghai customs area foreign trade import and export situation.

Among them, exports of US $154 billion 810 million, an increase of 31.2%, compared with the same period in 2008 still fell 0.6%; imports $101 billion 540 million, an increase of 55.8%, an increase of 13.1% over the same period in 2008; the cumulative trade surplus of 53 billion 270 million U. S. dollars, a slight increase of 0.9%.

However, while China's exports grew in May, the US trade deficit with China increased.

According to the statistics released by the US Department of Commerce in June 10th, the US trade deficit with China in April has increased from 16 billion 900 million US dollars in March to US $19 billion 130 million in April. Meanwhile, the trade deficit between the United States and other trading partners (except Canada) has been decreasing gradually.

For this reason, some economists in the United States have directed against the yuan and began to attack the RMB exchange rate.

Meanwhile, US Treasury Secretary Geithner said later that the US side will put pressure on China to find a fundamental solution.

Restatement of RMB appreciation theory

In June 10th, Geithner strongly criticized the RMB exchange rate policy at the Senate hearing, saying that the change in the value of the renminbi was "extremely important" to the world economy. He also promised to continue to press China to carry out fundamental exchange rate reform.

In addition, Olivier, Blanchard, a member of the European Central Bank's Management Committee and chief economist of the IMF, both said that the renminbi must be sufficiently flexible.

On the 16 day, Levin, chairman of the US House raising Committee, said that if China did not quickly increase the value of the renminbi, Congress would pass legislation to force it to adjust the RMB exchange rate.

Levin said the Obama administration is expected to exert pressure on China at the end of June and the summit of the group of twenty (G20) to facilitate the revaluation of the RMB exchange rate.

RMB appreciation can not solve Sino US trade imbalance.

Chinese Foreign Ministry spokesperson Qin Gang told reporters on the issue of RMB exchange rate on 14 July that a large number of facts have proved that the RMB exchange rate is not the main cause of Sino US trade imbalance.

The appreciation of the RMB can neither solve the problem of Sino US trade imbalance nor solve the problem of low savings rate, borrowing consumption and unemployment in the United States.

Qin Gang pointed out that a large number of facts have proved that the RMB exchange rate is not the main cause of Sino US trade imbalance.

The appreciation of the RMB can neither solve the problem of Sino US trade imbalance nor solve the problem of low savings rate, borrowing consumption and unemployment in the United States.

We hope that politicians in the US can seriously think about how to solve the problems of their own economic structure, rather than blaming others.

The real exchange rate of RMB continued to rise in March.

The latest data released by the BIS show that in May, the real effective exchange rate index of the RMB was 119.99, a sharp rise of 3.37% in the annulus.

The effective exchange rate of RMB has risen even in March.

However, HSBC's research report says that the nominal exchange rate of the renminbi will not change for the rest of the year, and it is expected that the renminbi will only rise again in 2011, with a cumulative increase of 4% next year.

Analysts believe that while Spain and Portugal have taken measures to cut the budget deficit and alleviate a more serious debt crisis in Europe, the market is worried that cutting government spending will lead to a sharp decline in GDP growth.

In addition, if the 750 billion euro aid plan can be successfully implemented, it is essentially a solution to monetization of fiscal problems, which will push up long-term inflation expectations and the euro will still fall.

Because Europe is China's main export area, the appreciation of the euro will have an adverse impact on China's exports.

One way export to European shoe enterprises

For enterprises that only export to Europe without importing from Europe, the impact of the depreciation of the euro is relatively large.

In the interview with our reporter, Lin Cai Lang, director of business promotion at Anlong fairytale world (Hongkong) Limited, the largest children's footwear enterprise in Hongkong, said that exports to Europe are not clear now, especially in the euro area.

"The industry thought that the EU anti-dumping duties on Chinese shoes would be terminated. It was not thought that the EU would continue to extend the anti-dumping duty of 16.5%, and that the prices of Chinese manufacturing enterprises were rising due to rising costs and the depreciation of the euro. These factors combined to make it difficult for EU buyers to raise their retail prices.

For example, in France, a pair of shoes that only sold 8 euros last year doubled over the past year, and the rapid rise in prices made it impossible for consumers to accept them easily.

In order to reduce procurement costs, some European customers pfer orders to Vietnam and other countries.

Lin Cai long said.

For some Chinese clothing and shoemaking enterprises, while Europe's economy is weak, they are eager to buy European brands or agency brands to expand domestic sales. Lin Cai long said that there was no such plan for the time being. European children's shoes had certain differences in size, color, price and other aspects of China's local market, so buying and coming back needed to spend time with local market, so it was better to develop their own brands.