2011: Inflationary Pressure Raises Interest Rate Expectations.

The interest rate increase in December 26, 2010 marked China's official entry.

Pair cotton

Inflationary pressures trigger interest rate hikes

At present, the central bank has stabilized.

In any case, raising interest rates is an inevitable choice.

Analysts generally believe that China will raise interest rates 2~4 times during the year.

At the same time, as the price pressure is bigger in the first quarter of this year, the market has generally reached a consensus on raising interest rates in the first quarter.

It is estimated that the fastest increase in interest rates is likely to be before and after the Spring Festival.

"As prices continue to rise and the negative interest rate gap continues to expand, it is necessary to raise interest rates."

Hu Xinzhi believes that the possibility of raising interest rates 2~3 times in 2011 is more likely to increase interest rates by 50~75 basis points.

In the past few times, the monetary policy regulation of the rising price cycle shows that the central bank is more inclined to use the reserve ratio method, and the statutory deposit reserve ratio is expected to be raised by 3~5 times.

Ma Jun expects that the reserve requirement will continue to rise several times this year, raising interest rates by 75 basis points and RMB appreciation by 4%~5%.

The biggest impact on low-end Enterprises

Raising interest rates, as a double-edged sword, will inevitably hurt the real economy while completing the goal of "resisting inflation".

From the experience of 2007 and 2008, the negative impact of interest rate increase in textile industry is relatively large.

First of all, raising interest rates directly affects the profits of enterprises.

Under the increase rate cycle, the financial cost incurred by corporate debt will increase, thereby affecting the profits of enterprises.

No matter how much interest rates are raised, enterprises will be subject to certain shocks, but the magnitude will be different and the degree of impact will be different.

According to the head of a textile enterprise, according to the current bank loan of $4. 50 million, even raising 25 basis points, it means that more than 150 yuan of interest will be spent in one year.

Because the exchange rate is related to interest rate increase, the appreciation of domestic currency brought by interest rate increases has more obvious impact on export enterprises.

Ningbo Tian Hui Textile Co., Ltd. official said, although business loans are not much, but raising interest rates will still increase costs, so that the difficulty of export orders increased further.

Due to soaring raw material prices and exchange rate fluctuations, according to the current order price is becoming more and more difficult to bear, the company is ready to raise the price of the whole line, but the price increase may lead to the loss of customers, enterprises must be careful to consider.

"Because of the rising cost of raw materials and so on, we have been adjusting prices frequently. Customers complain that if the unit price continues to rise, the order will be pferred to Bangladesh, India or Vietnam.

Our price competitive advantage is becoming weaker and weaker, so the price increase is risky.

For cotton textile enterprises, the effect of interest rate increase may be further amplified by other factors.

Due to the soaring price of raw materials, the rising cost of labor and the appreciation of the renminbi, the increase in interest rates will add to the burden on enterprises, and the affordability of SMEs will be even weaker.

Interest rate increase is not the same.

The head of Guangdong Yufeng Textile Co., Ltd. believes that the impact is divided into two levels: on the one hand, the increase in interest rate leads to the increase of costs, which further leads to a decline in profits, especially for orders which have already signed contracts. In 2010, labor costs rose sharply, 20%~30%, and raw material prices continued to rise. Interest rate hikes will continue to cut down the small profits of enterprises. On the other hand, interest rate hike will restrain consumers' consumption in textiles and some extent, and affect the domestic market demand.

Financial pressure tests enterprise vitality

Industry analysts believe that the average profit margin of textile enterprises is only about 3%~4%. After raising interest rates, SMEs will have greater difficulty in raising loans and raise financing costs, including private interest rates.

The small increase of the 25 base points has relatively little impact on the enterprises, while the 50 base points, enterprises with better interest rates can digest, but most enterprises at the average level will be more difficult to operate, and the enterprises with lower average level will have survival problems.

Xu Jianmin, general manager of Sanyang Textile Co., Ltd. believes that inflation and interest rate increase have the greatest impact on labor-intensive upstream raw material enterprises, so the test of cotton textile enterprises this year is particularly grim, especially for enterprises positioned in the low-end market.

The biggest test of textile enterprises this year is the safety of capital chain. The pressure of tightening money and wage increases will increase the cost of capital for enterprises.

In the last round of interest rate hikes, due to the continued appreciation of the renminbi, the sharp rise in raw materials and energy prices, and the rapid rise in labor costs, coupled with the tight monetary policy adopted by the state, there was a serious difficulty in the financing of enterprises. The increase in interest rates and reserve requirements of banks raised the scale of loans, and there was a collapse of SMEs.

As we all know, the proportion of self raised funds in textile industry is as high as 75%, which reflects the fact that the loan and financing threshold of textile SMEs is too high.

Because of being looked upon by banks, textile SMEs can not get long-term investments, and they must not invest in short loans, or even borrow usury.

The consequence is that as long as the market conditions change and the sales of products are in trouble, the capital chain will break up and the enterprises will go bankrupt.

In January 6th, although the work conference of the Central Bank of China did not specify the target of monetary and credit growth in 2011, it pointed out that we should make good use of the total liquidity gate, guide the reasonable growth of the total amount of money and credit, and maintain a reasonable scale of social financing.

In order to curb inflation and tighten liquidity, the central bank will comprehensively use the price and quantity tools such as interest rate, deposit reserve ratio and open market operation in 2011 to maintain a reasonable and moderate liquidity in the banking system.

At present, in the case of loose liquidity, the central bank's determination to tighten liquidity in the first half of the year can not be ignored.

It should be pointed out that the overall macroeconomic environment of the current round of interest rate hikes is different from that of last time. At present, the recovery of the developed economies in the world is relatively slow, and its low interest rate policy makes the emerging markets face excessive liquidity.

The domestic economic recovery is relatively fast, and the overall economy is at a critical stage of structural pformation.

Compared with the previous cycle of raising interest rates, this year's overall macroeconomic environment is relatively optimistic, but ensuring the safety of capital chain is still a matter for cotton textile enterprises to pay attention to.

Actively promoting industrial upgrading and optimizing the allocation of resources can make the vitality of enterprises stronger.