The reduction of export tax rebate rate has played a certain role in restraining the expansion of trade surplus.
RMB appreciation is a measure to reduce China's trade surplus.
The widening surplus gap-a large number of foreign currencies enter the export companies, demanding an increase in foreign exchange reserves-the export companies convert them into RMB through various transactions and put them into the market-resulted in an increase in the issuance of RMB, which led to the excessive growth of money supply, the value of money exceeding the value of goods-and the rise in prices indicated that the currency was depreciating (internally). What was originally bought with 10 yuan will now be bought with 12 yuan, indicating that the purchasing power of money is declining, that is, inflation. Under the existing RMB exchange rate system, if the central bank does not have effective assets to hedge excessive foreign exchange holdings, the negative impact brought by the rapid increase of foreign exchange reserves will promote the continuous appreciation of the RMB.
The surge in foreign exchange reserves is caused by the undervaluation of RMB. The undervaluation of RMB makes the price of export products fall, which leads to a large increase in exports; The appreciation of foreign currency assets makes RMB assets cheaper, thus increasing the speed of foreign direct investment flowing into China; It makes international hot money expect RMB to appreciate, thus entering China on a large scale.
The reduction of export tax rebate will restrain China's trade export, thus alleviating the pressure of the surge of foreign exchange reserves and the appreciation of RMB.
At present, many export trading companies export at very low prices and earn profits by export tax rebates. The reduction of the tax rebate rate will definitely hit such companies, and the export volume will be reduced-the trade surplus will be reduced-the pressure of international appeal for RMB appreciation will be slightly eased, and foreign exchange reserves will be reduced.