The US Induced Exchange Rate Will Bring Huge Disaster To The Main Body Economy Of China'S Manufacturing Industry.

In September 24th, the house of Representatives fundraising committee voted for a special tariff aimed at underestimating the exchange rate of the local currency.

If the bill can break through the house of Representatives and become a formal bill after the signing of the president, and thus punish China, resulting in China's retaliation, the fierce trade confrontation between China and the United States is inevitable tragedy.

In June of this year, the renminbi was once again decoupled from the US dollar to hang on to a basket of currencies.

The RMB exchange rate should rise, and there are ten results in the ten theories.

Because China's capital account is not fully open, there can be no full market price. In fact, there is no complete exchange rate market in the world.

Therefore, the US induced exchange rate began to prevail.

The induced exchange rate is essentially a regulated exchange rate, and the United States, based on trade data, requires the other side's currency to appreciate in order to balance the deficit.

If China persists in not appreciating, then the United States will push up the appreciation of the renminbi by means of increasing tariffs.

This is an unprecedented blow for China.

China is

Usually, the industrial countries want to keep the exchange rate stable, otherwise the profits of the manufacturing industry will be swept away by the financial industry.

After the Plaza Accord in 1985, the yen doubled against the US dollar, and Japan was on the road of bubble economy because of the failure to expand domestic demand and the heavy pressure on exports.

In the past, China could not go back to Japan's old road and strictly control asset bubbles, but China could not raise corporate profits.

According to the research results of the banking research center of Central University of Finance and Economics, about 57% of the small and medium-sized export enterprises have a profit margin of less than 5%, especially in the labor-intensive manufacturing industries such as textiles, clothing, shoes and hats. 84.07% of the export enterprises have a profit margin of less than 5%.

Through the statistics of the appreciation rate of RMB that the export enterprises can bear, it is found that the appreciation rate of the RMB that the export enterprises can tolerate is mainly below 2%, and some enterprises (707) account for 39.7% of the total sample size.

Among them, textile, clothing, shoes and hat manufacturers can tolerate RMB appreciation of less than 2%, up to 44.5%, while those who can tolerate more than 6% account for zero.

It is also estimated that RMB appreciation of 1% will result in 4% loss of profits for household appliances, and 1.5 percentage point decline in the total output value of household electrical appliances. If the RMB exchange rate rises 20% directly, most of the small and medium-sized manufacturing enterprises will be directly closed down, except for aviation and paper making industries, and hundreds of millions of manufacturing workers are in danger of losing their jobs.

Some people would think that SMEs can not tolerate price fluctuations should be closed, but any major political reform must leave a buffer space for the relevant enterprises, otherwise it will be murder.

After joining WTO, there is buffer time from automobile to finance, and manufacturing industry should also enjoy national treatment.

On September 22nd, Chinese Premier Wen Jiabao said in New York that the continued appreciation of the renminbi would cause 20% serious unemployment problems and cause social unrest.

The closure of a large number of enterprises is not a purely economic issue, but a social and political issue.

In this sense, the US forced RMB appreciation of 20% is nothing less than a political murder.

A more serious problem is, if

For China, the direction of the reform of exchange rate liberalization and monetary policy will not change, and what kind of technical means to take under this development path and what kind of reasonable and regular response methods should be adopted is also the key to test the sense of responsibility, legal implications and game skills.

Kill one thousand, self harm eight hundred.

For American politicians who are accustomed to unilateralism, China must also have a corresponding response to not let American politicians get used to the benefits of unilateralism. After all, the world is no longer the time for the American family to say.