First, expand the demand of domestic consumers for imported products, so that they can get more benefits. The most obvious change brought by the appreciation of RMB to domestic consumers is that the RMB in hand is "more valuable". If you study abroad or travel, you will spend less money than before; In other words, spending the same money can make you do more things than before. If you buy imported cars or other imported products, you will find that their prices have become "cheap" and ordinary people have gained more benefits.

Second, reduce the cost burden of imported energy and raw materials. China is a country lacking in resources. With the increase of international energy and raw material prices, domestic enterprises are bound to bear more and more heavy cost burden. In 2004, the average price of refined oil imported from China increased by 30.8% compared with 2003, steel increased by 43.7%, copper increased by 50.4%, and iron ore increased by 1 times.

The rising prices of imported energy and raw materials will not only raise the prices of the whole basic means of production, but also devour the profits of enterprises in the middle and lower reaches of the industrial chain, making their profitability decline or even lose money. If the RMB appreciates to a reasonable level, it will greatly reduce the burden of importing energy and raw materials in China, and enable domestic enterprises to reduce costs and enhance their competitiveness.

Thirdly, we should use the "reverse mechanism" to promote the adjustment of China's industrial structure and improve China's position in the international division of labor. For a long time, China relied on the expansion of cheap labor-intensive products to implement the export-oriented strategy, which made the export structure not optimized for a long time and made China play the role of "world wage earners" in the international division of labor. Appropriate appreciation of RMB will help export enterprises to improve their technical level and product grade, thus promoting the adjustment of China's industrial structure and improving China's position in the international division of labor.

Fourth, it helps to ease the relationship between China and its major trading partners. In view of the rapid development of China's export trade and the increasing trade surplus, China's major trading partners have repeatedly demanded RMB appreciation. In this regard, simply saying "no" seems encouraging, but it doesn't help. Because this will continue to worsen China's relations with them and set obstacles for China's foreign trade and economic development.

In recent years, the sharp increase of anti-dumping cases against China is a very convincing evidence. A proper appreciation of RMB will not only help to ease the relationship between China and its major trading partners, reduce economic and trade disputes, but also help to establish a good international image of China as a big country.

Fifth, it helps to reduce the threat of "foreign exchange holdings" to the independence of China's monetary policy. Since the unification of 1994, there have been a large number of "double surpluses", which have led to the high foreign exchange reserves in China and seriously damaged the independence of China's monetary policy. Therefore, an appropriate appreciation of RMB can be closer to the market exchange rate level and alleviate the adverse effects of foreign exchange holdings.

The advantages and disadvantages of RMB appreciation cannot be generalized. Although it will increase the cost of export products and reduce the competitiveness of Chinese products in the international market, at the same time, the appreciation of RMB will also bring many favorable factors to economic development, especially in forming a reverse mechanism and promoting China's economic transformation.

negative impact

First, it will hit China's export enterprises, especially labor-intensive enterprises. In the international market, the export price of China products, especially labor-intensive products, is far lower than that of similar products in other countries. The reason is that China's labor price is low, and the fierce domestic competition makes export enterprises compete to adopt the strategy of selling at a low price and paying no expense.

Once the RMB appreciates, in order to keep the bottom line of RMB price unchanged, the price of China's export products in foreign currency will increase and weaken its price competitiveness; If the foreign currency price of export products remains unchanged, it will inevitably squeeze the profit space of export enterprises and have an impact on export enterprises, especially labor-intensive enterprises.

Second, it is not conducive to the introduction of foreign direct investment in China. China is the country that attracts the most foreign direct investment in the world. At present, foreign-funded enterprises are playing a more and more obvious role in China's industry, agriculture, service industry and other fields, which has a great impact on promoting technological progress, increasing employment and expanding exports, thus promoting the development of the entire national economy.

The appreciation of RMB will not have a substantial impact on foreign investors who have already invested in China, but it will have a negative impact on foreign investors who are about to invest in China, because it will increase their investment costs. In this case, they may transfer their investment to other developing countries.

Third, increase domestic employment pressure. The impact of RMB appreciation on export enterprises and overseas direct investment will eventually be reflected in employment. Because most of China's export products are labor-intensive products, blocked exports will inevitably increase employment pressure; Foreign-funded enterprises are one of the departments that provide the most new jobs, and the slowdown of foreign investment growth will make the domestic employment situation more severe.

Fourth, it affects the stability of financial markets. If the RMB appreciates, a large number of short-term speculative funds abroad will seize the opportunity to speculate on the RMB exchange rate. Under the condition that the development of China's financial market is not perfect, it will easily lead to financial and monetary crisis. In addition, the appreciation of RMB will further increase the actual amount of existing non-performing assets of banks in US dollars, which is not conducive to the reform of the entire banking industry and the adjustment of debt structure. -that is, the "hot money" now.

Fifth, the huge foreign exchange reserves will face the threat of shrinking. At present, China's foreign exchange reserves are as high as US$ 2,454.3 billion, ranking first in the world. Adequate foreign exchange reserves are an important symbol of China's growing economic strength and improving the level of opening up to the outside world, and also a powerful guarantee for us to promote domestic economic development and participate in foreign economic activities.

However, once the RMB appreciates, the huge foreign exchange reserves will face the threat of shrinking. If RMB appreciates by 10% against USD and other major convertible currencies, China's foreign exchange reserves will shrink by 10%. This is a serious problem that we have to face.

Extended data

Historical experience and realistic conclusions show that currency appreciation will not have a good result for any country. To understand the mystery, we have to talk about people's desire to participate in the transaction, the right to judge the terms of the transaction, and the right to decide the transaction. In other words, in addition to the two explorations of the old theory, the last three key factors need to be explored.

Because everyone wants to make more money in the transaction, under normal circumstances, people have the complete right to choose the terms of the transaction and decide whether the transaction will happen. The good influence of currency appreciation on "promoting imports" has been filtered out by people's independent choice in the three links of real life.

Let's first look at the impact of domestic currency appreciation on people's labor and leisure. The exchange condition of currency appreciation means that people's labor products and labor force must be sold at lower prices. When the currency appreciates, people's labor and labor products will depreciate accordingly, which is thankless. People can only get a little money, which will make many people choose leisure and give up labor.

The further impact of giving up the labor force is: economic decline, income reduction, and then consumption reduction, and foreign imports will also shrink-the appreciation of the domestic currency directly drags down the world economy.

In the international export sector, the domestic economic depression caused by currency appreciation directly weakens a country's export competitiveness, which in turn affects the optimization of global resource allocation and drags down the world economy.

In the process of international currency input, although currency appreciation will attract some hot money, the main purpose of hot money is to earn the difference and eventually flow out of the country, which will drive more money out of the country, thus making a country's currency more scarce; Looking at the reaction of foreign long-term funds to currency appreciation, currency appreciation forces most products to be sold cheaply, which directly leads to bankruptcy, suspension of production, shutdown of workers and lower consumption index. The deterioration of the investment environment will eventually force long-term investment to shift its position.

In the international import of goods, currency appreciation will reduce the amount of currency obtained by the counterparty, which will make the counterparty choose to reduce the transaction volume or cancel the transaction and find another buyer, thus reducing social employment opportunities, national wealth and total foreign trade, causing economic recession and damaging the development of individuals, countries and the world.

Obviously, the mistake of the old theory is that people are regarded as an animal that passively obeys all trading conditions. Even if the trading conditions are unfavorable, it will not cause the relative stagnation of trading growth or the reduction of trading volume.

In other words, the old monetary theory did not consider the harmful effects of unfavorable trading conditions on the quantity and quality of transactions, and mistakenly thought that people would continue to trade against their expectations-exchange less money for more labor or labor products, thus completely violating people's motives and purposes of participating in transactions and becoming a typical "castle in the air."

In other words, it is people who decide the transaction, not the terms of the transaction. Adverse trading conditions will not take effect, and related transactions will not occur, but the old theory can't see it.

Baidu encyclopedia-RMB appreciation

Baidu encyclopedia-currency appreciation