Analysis Of RMB's Low Cost Advantage Outside Mainland China

The Shanghai free trade zone has become the most attractive offshore RMB center after London, Luxemburg, Singapore and Hongkong.

The economist think tank surveyed 150 top executives of multinational companies. More than half of the executives attributed the use of Renminbi to the low cost advantage of the renminbi outside mainland China.

The survey also said that China advocated Asian Infrastructure Investment Bank Western countries, including the United Kingdom, will shake the US led world economic system.

　　 RMB Already the fifth most commonly used currencies in the world, it currently accounts for only 2.2% of the world's total volume, far below the US dollar and the euro.

But in October of this year, IMF IMF will consider whether to include Renminbi in a basket of currencies of the special drawing rights (SDR). Once considered and approved, the renminbi will be adopted. Effect Will be strengthened.

According to the survey, 2/3 of the respondents expect the RMB cross-border transaction volume to double in the next five years. Executives from multinational companies said in the survey that the use of Renminbi allows them to invest in the mainland market, expand their business in China, and have more flexibility in their salaries and benefits.

However, the top executives of multinational enterprises also have three concerns: 1. lack of understanding of RMB transactions; 2. RMB liquidity is not enough; 3. regulatory issues, such as the China liquidation and settlement system delay.

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Goldman Sachs research report believes that because the government strongly hopes to boost exports, the RMB may depreciate again after a brief rebound since mid March. This statement has been denied by the government. Recently, Premier Li Keqiang clarified the attitude of the Chinese government that China would not join the "currency war" or deliberately devalue the renminbi. China has been pushing ahead with the reform of the RMB exchange rate formation mechanism, expanding the two-way floating zone and improving the managed exchange rate system based on market supply and demand.

Premier Li Keqiang stressed: "the renminbi is basically at a basically stable level. I do not want to see the RMB continue to depreciate, because we can not stimulate exports by devaluation, and do not pay attention to expanding domestic demand. China's economic structure is hard to adjust. Enterprises should not rely solely on or rely mainly on the depreciation of the renminbi to increase export volume. Instead, they should practise Chr (34) Chr (34), make their products technological innovation and quality improve greatly. In addition, we hope that the major economies will strengthen macroeconomic policy coordination. We do not want to see the state of currency devaluation, which will lead to currency wars and forced devaluation of the RMB. I think this is not a good result for the world financial system. Finally, it may lead to protectionism and impede the process of globalization, which we do not want to see. "

At present, many economists predict the exchange rate of RMB against the US dollar at the end of the year 1 yuan to 6.2 yuan to 6.35 yuan.

Since the end of March, the exchange rate of RMB against the US dollar has been generally stable. The middle price fluctuated between 1 US dollars and 6.13 yuan to 6.15 yuan. The spot price fluctuated from 6.19 to 6.22 yuan. Analysts pointed out that, after the Yuan's derogation and rise and overall stability last year, the expectation of RMB on the market has gradually become balanced. No long-term unilateral appreciation or unilateral depreciation has become the consensus of the market. In the short and medium term, despite the strong US dollar and the domestic economic downturn, the RMB is still under pressure, but considering the attractive interest of domestic and international spreads and the demand for RMB internationalization, the RMB exchange rate will remain wide.