China'S Foreign Exchange Reform Is The "Oolong" Of The US Team.

Over time, the central bank has decided to terminate the fact that the exchange rate between RMB and the US dollar is in fact linked, and focus on reference to a basket of currencies to enhance RMB exchange rate flexibility.

"On the one hand, the renminbi

He even believes that most industries will benefit from the appreciation of the renminbi.

This also makes it easy for us to understand why China's foreign exchange reform is "the goal of the US team".

Export industry may not be damaged.

When it comes to the appreciation of the renminbi, people first think that the export industry will bear the brunt of adversely, but in the view of CICC, the overall benefit (or cost) of RMB appreciation to a certain industry depends on two factors: the ratio of export dependence (the ratio of exports to total output) and the proportion of domestic cost in total cost.

Industries with higher export dependence and higher domestic costs (such as textile and garment manufacturing) may suffer more losses due to the appreciation of the renminbi, while industries with lower export dependence and stronger dependence on imported raw materials, such as commodities processing industry, will benefit more from the appreciation of the renminbi.

It can be seen that the focus of the debate is mainly on the appreciation of the renminbi.

In addition, from a cost / revenue perspective, the appreciation of the renminbi will lead to a rise in the cost of US dollars, which will have a negative impact on the export of enterprises, but at the same time, it will also help the domestic market, because the appreciation of the renminbi will reduce the cost of imports of raw materials.

A comprehensive measurement of cost / income requires comprehensive consideration of the impact of RMB appreciation on exports and domestic sales.

Combined with the impact on exports and domestic sales, CICC simulates the changes in the profits of various industries under the 5% appreciation of the renminbi, and draws some conclusions: the winner of the appreciation of the renminbi is the heavy industry that relies on imports of bulk commodities.

RMB appreciation of 5% will make the oil processing and natural gas production industry, metalworking industry, pportation.

However, the office equipment industry and the textile and garment industry will be damaged.

If the appreciation of RMB is 5%, the cost of office equipment and textile and garment industry will increase by 1% and 0.8% respectively, mainly because these industries are more dependent on exports or their supply chains are mainly domestic.

Surprisingly, exports to the electronics manufacturing industry, electrical equipment industry and general and special equipment industries benefited slightly from the appreciation of the renminbi, which is due to the fact that most of the raw materials they used were imported, so domestic sales benefited more than the extent of export damage.

"Although China is a big exporter of personal computers and electronic products, most of them belong to the processing trade. The components to be imported are assembled and shipped to the outside world.

This means that for many manufacturers of technology products and sellers who obtain sourcing from China, RMB strength is a pros and cons, and even more conducive to advantages than disadvantages.

CITIC Securities analyst Shaw surnamed said in an interview with the China Commercial Daily reporter.

China International Capital Co recently said that although China's computer and electronics manufacturers are one of the industries most reliant on exports, nearly 60% of their cost comes from imports.

In addition, Fu Peng, chief strategist of China International Futures Research Institute, seems that China's export industry has no competitors outside, and the so-called competitors are also from the country. Although the processing industry has no apparent technological content, its demand for logistics, port and mechanic maturity is actually very high.

He said.

Fu Peng gave an example to the Chinese Commercial Daily reporter. "The same price of a pair of shoes imported from China is slightly higher than that of Africa and Vietnam, but the gap between quality and production technology may be much higher than that of price difference. Therefore, China's products are still the most cost-effective."

In an interview with the China Commercial Daily, MAX, an American NGO organization, admitted that "Americans have a high degree of dependence on Chinese products. In some small and medium-sized supermarkets or chain stores, Chinese products can be seen everywhere, and some even account for over 80%. The consumption of good quality and inexpensive Chinese products has become a habit of Americans. This habit is not easily changed in the short term with the slight changes in prices."

Obviously, MAX does not think Americans can quickly find products from another country to replace them.

Fu Peng also asserted that the appreciation of the renminbi has not done any harm to some export oriented enterprises, but has made the value of the enterprises appreciate in an all-round way. In the process, the income of employees will also rise, and the profit margins of enterprises will also rise, thereby accelerating the upgrading of internal industries.

Nomura Securities strategist Dai Shiwen also told the China Commercial Daily reporter that the direct beneficiaries of the appreciation of the Renminbi should not be overlooked. They are all domestic giants, including refineries (such as Sinopec), airlines (such as Eastern Airlines and southern airspace), and commodity importers (such as paper and metal manufacturers).

In Nomura Securities, China's toll roads listed in Hongkong are most likely to profit from this theme.

These toll highway shares are similar to Renminbi bonds, offering high dividend yield, dividend yield above average, and 100% yuan cash flow.

Employment is limited.

When we discuss the negative effects of RMB appreciation on the employment of export-oriented enterprises, we may as well review the history.

In fact, the appreciation of the renminbi in the past did not harm China's exports and employment.

The renminbi has appreciated by 17.5% against the US dollar since its decoupling from the US dollar in July 2005, but China's share in the US import market has continued to expand, even after the outbreak of the financial crisis.

The analysis of CICC pointed out that China's exports were not significantly affected by the RMB exchange rate, partly because China's exports contained much of the imported intermediate goods.

At present, the market is worried that even if the RMB is only gradual appreciation, the export of some low profit labor intensive industries in China will collapse, causing a large number of workers to lose their jobs.

But the recent experience of Chinese clothing and footwear exporters shows that these worries are unreasonable.

The main competitors of Chinese clothing and footwear export enterprises in the US market are from Mexico.

In 2009, China's share of clothing and footwear market in the United States was 46%, while Mexico was 37%.

Although the renminbi has appreciated all the way since the Mexico peso in 2000, China's share of the textile and clothing market in the United States has risen from 21% in 2000 to 48% in 2009.

After the outbreak of the financial crisis, from September 2008 to March 2009, the yuan appreciated 39% against the peso in Mexico, which led to a substantial increase in the cost of Chinese export enterprises relative to its competitors.

The share of Chinese exporters in the US clothing and footwear market actually dropped from 46% to 42%, but as the renminbi stabilized against the Mexico Peso exchange rate, the market share of China's export enterprises rebounded rapidly, even higher than the level before the renminbi appreciated substantially.

This means that even a sudden huge exchange rate impact will have only temporary effects on China's export market share.

Once Chinese exporters have adapted to such shocks for some time, they will be able to regain competitiveness.

In other words, the low profit margins of some labor-intensive industries do not mean that they lack the ability to deal with the appreciation of the renminbi.

The factory will move westward or will come.

As the appreciation of RMB has squeezed the profit margins of export enterprises in the southeast coastal areas in different degrees, how to maintain or even increase profits under the situation of weakening the advantage of cheap labor force is a difficult problem faced by every export company.

In the view of Fu Peng, "factory westward relocation" can solve this problem. If the factory of production products is pferred to the Western raw material base, it can save costs in raw material procurement. At the same time, many idle labor forces in the western region can also be effectively utilized.

According to incomplete statistics from the China Commercial Daily reporter, the monthly salary of a mature mechanic in the southeast coastal area is between 2000 yuan and 3000 yuan, while the company moves to the west, and the cost of wages will drop to less than 1500 yuan as the cost of living, housing and so on.

For example, Foshan ceramics, which has been popular all over the world, has undergone such pformation. They moved the factory from Guangdong to Shandong, and now moved the factory to the Ordos area. Although such migration is cumbersome, insiders told the China Daily News reporter that the factory relocation can help them save 24 million yuan a year, which also forms their own unique competitive advantage.

Fu Peng pointed out to the China Commercial Daily reporter that in order to create favorable conditions for the coastal enterprises to move westward, the government's primary task at present is to build roads and other infrastructures in the western region.

When these infrastructures are complete, a large number of companies and talents will be willing to flow into the western region, thus driving the enthusiasm of the whole region. Of course, correspondingly, health care and education will be the focus of the development of the western region in the future.

With the deepening of the RMB exchange rate reform, the industrial pformation between the East and the west is an important mission that the country will accomplish at any cost. It may even mean sacrificing GDP to a certain extent.

Because for our country, the most important thing now is to promote the pformation of enterprises. The eastern region has been pformed into the three main industries, such as the service industry and the financial industry. Their main tasks are to export, trade, finance, exhibition and so on.

The products themselves are processed and pported in the western region. When the economic development of the western region reaches a certain level, they can even sell domestic products to the Middle East and Central Asia, and penetrate into their core areas through trade. This will also lay a solid foundation for diplomacy.

Fu Peng predicts that the western development of the western region will take nearly 30 years to complete.

However, the determination of the state to develop the West will not be weakened.

President Hu Jintao visited Xinjiang and Inner Mongolia many times in one year, and the capital investment has totaled 682 billion yuan.

In many people's eyes, this has immediately become a "new stimulus policy".

In the next 10 years, the western region will become a new engine for China's economy.

It is not hard to imagine that this "economic relay between the East and the west" will become a gorgeous performance that shocked the world.

As long as the eastern and Western economies achieve coordinated development and form a complete "Taiji" trend, and with the deepening of the RMB exchange rate reform, China's economy will surely be at the top of the world.

Review {page_break}

Looking back at all previous exchange rate reforms, it is easy to see that every exchange reform is leading China's economy to continue to take a bright road. Of course, the trade sector is not only the first victim, but also the most direct beneficiary. Exports have also become the fastest running vehicle in the three driving forces of China's economy.

In January 19, 1949, the first exchange rate of RMB in New China to western countries was generated at Tianjin port. After that, the fixed exchange rate system was implemented for a long time, and RMB was overvalued over a long period of time.

The floating exchange rate system was adopted from 1949 to 1952.

From 1953 to 1973, in the planned economy system, the RMB was officially linked to the US dollar, and the exchange rate remained at the level of US $2.46 to 2.46 yuan.

But at that time, there was little foreign trade in the mainland of China, so the significance of the RMB exchange rate was not great.

In 1973, due to the oil crisis, the world price level rose, and the floating exchange rate system was widely adopted in western countries, and the exchange rate fluctuated frequently.

In order to adapt to the pformation of the international exchange rate system and the adverse effects of exchange rate changes in the main currencies of the world, according to the principle of RMB valuation, settlement, trade and foreign trade, the RMB exchange rate is adjusted by the weighted average method of "basket of currencies" referring to the floating state of currency exchange rate in western countries.

For this reason, the exchange rate of RMB against the US dollar changed from 2.46 yuan in 1973 to 1.50 yuan in 1980 from L dollars.

From 1980 to 1994, the dual exchange rate system was implemented in the mainland of China.

From 1981 to 1984, a double exchange rate system was initially implemented. Apart from the official exchange rate, the internal settlement price of foreign exchange for foreign trade settlement and the calculation of economic efficiency of foreign trade units was stipulated separately. The price was fixed at 2.80 yuan according to the export exchange cost at that time.

Since the exchange rate reform in 1994, the reform of RMB exchange rate formation mechanism can be divided into four stages.

In the first stage, when the RMB exchange rate was merged in 1994, the exchange rate of RMB against the US dollar increased gradually.

After 2 years of operation, the exchange rate of RMB against the US dollar began to stabilize. The exchange rate of RMB against the US dollar basically stabilized at around 8.30 yuan, and the maximum fluctuation range was no more than 0.4 yuan.

The second stage, in July 2005, China announced the managed floating exchange rate system.

After the RMB was decoupled from the US dollar, the RMB exchange rate against the US dollar has maintained a unilateral appreciation trend.

The third stage, from July 2008 to date, the central parity of the RMB against the US dollar ranged from 6.82 yuan to 6.86 yuan, especially in the range of 6.82 yuan to 6.84 yuan.

China has narrowed the fluctuation of RMB appropriately to cope with the international financial crisis. This is in line with the economic interests of our own country and contributes to the rapid realization of stability and recovery in our economy.

The fourth stage is to further promote the reform of exchange rate formation mechanism and enhance the flexibility of RMB exchange rate.

In fact, this reform should not be seen as a new reform, but a continuation of the reform process interrupted by the crisis.

It is worth noting that in 2005, the RMB exchange rate reform started.

With the pace of RMB appreciation, the Shanghai Composite Index rose from 998 to 6124 in October 2007.

Although there are stock reform factors and the prosperity of the real economy in the great bull market, it is undeniable that exchange reform is one of the important factors to start the bull market.

"The market environment is somewhat similar to what it was 5 years ago."

Fu Peng, chief strategist of China International Futures researcher, boldly predicted the China Commercial Daily reporter. It is expected that the crazy bull market will be reproduced from 2005 to 2007 in the next 5 years.