The exchange rate directly affects both imports and exports

The latest exchange rate is 1 U.S. dollar to 6.74 yuan. If the exchange rate is rigidly set at 1:1, at first glance, it seems that in the short term, Chinese people will Really benefited. For example, before spending 10,000 US dollars to travel abroad was equivalent to spending 67,400 RMB, now you only need to spend 10,000 RMB to travel abroad. Previously, I bought a luxury bag for 1,000 US dollars, which is equivalent to 6,700 RMB. Now, It only costs 1,000 RMB to purchase, which really saves a lot of money.

But the actual situation is not what you think. The exchange rate becoming 1:1 is indeed conducive to imports. Chinese people can also afford high-end luxury cars, watches, luxury goods, cosmetics, etc., and parents of ordinary families can also send their children to study in prestigious schools abroad. However, the export side will be severely affected. frustrated.

In fact, every country hopes to exchange its own country's renewable resources for the non-renewable resources of other countries, and to achieve this goal, its own country's currency needs to be sufficiently "worthless". This is how our country “started”.

In the past, when my country's manufacturing industry was still at a low-tech level, a large number of children's toys, daily necessities, clothing and hats were exported to Europe and the United States, and these products were also popular among foreigners because the prices were sufficient. It’s low, the domestic price is 6.7 RMB, and you can buy it in the United States for 1 US dollar. If the exchange rate becomes 1:1, then the price will be instantly raised to 6.74 US dollars. Will anyone still buy it?

If no one buys it, domestic companies will not need to start operations, workers’ wages will not be paid, and basic living standards will not be guaranteed. This will cause a series of problems, especially people’s livelihood issues. Similarly, we cannot make money from the United States by exporting low-priced goods, and we cannot purchase non-renewable resources such as American oil, ore, and land.

The game between China and the United States on exchange rate issues has never stopped

The United States has always wanted to reduce the trade deficit with China through the appreciation of the RMB, thereby safeguarding the interests of domestic manufacturers. Benefit. The appreciation of the RMB will increase the operating costs of Chinese companies. This will push up the prices of Chinese goods exported to the United States and other countries around the world, and reduce the self-heating of competitiveness. On the one hand, China will make less money; on the other hand, China will make less money. The competitiveness of similar goods produced in the United States has accordingly increased, and market share and sales have naturally increased.

So the two countries have been competing over the exchange rate of the RMB and the US dollar. Take recent examples. The Federal Reserve has continued to cut interest rates after the epidemic. Its intention is to transfer risks to other countries. In response to the recent continuous appreciation of the RMB, the central bank announced on the 11th of this month that it will reduce the foreign exchange risk reserve ratio for forward foreign exchange sales business from the previous 20% to 0 from the 12th. The intention is to counter the appreciation of the RMB and release It is a signal that we do not want the RMB to continue to appreciate.

my country is the second largest holder of U.S. debt, which also determines that the RMB cannot appreciate excessively

my country holds about 1.1 trillion U.S. debt in the United States, second only to Japan. The second largest holder of U.S. debt. According to the current exchange rate, the United States needs 7.4 trillion yuan to repay these debts. If the exchange rate suddenly changes to 1:1, then the amount that the United States needs to pay will only be 15% of the previous amount. It can be said that Earn money with blood! Invisibly reducing the cost of repaying foreign debt for the United States.

If you still cannot understand the disadvantages caused by appreciation, you might as well take a look at Japan's Plaza Accord

In the 1980s, the U.S. fiscal deficit increased significantly, and the foreign trade deficit increased significantly. In order to improve the competitiveness of American companies, the United States signed the Plaza Agreement with Japan. The Japanese yen was instantly raised from 300 yen to 1 U.S. dollar to 70 yen to 1 U.S. dollar. The operating costs of Japanese companies increased significantly. In order to reduce costs, Japan must not Failure to relocate a large number of companies abroad will result in the hollowing out of Japan.

On the one hand, Japan’s unemployment rate has increased sharply after Japanese companies moved away from the country; on the other hand, the large amount of asset book gains brought by the appreciation of the yen have nowhere to put it, and can only be invested in the financial field and real estate field. These two major markets triggered a sharp increase in housing prices and a stock market bubble, and the Japanese economy entered a downturn and bubble period that lasted for more than ten years.

Conclusion

To sum up, if the exchange rate between the US dollar and the RMB becomes 1:1, it will indeed reduce the cost of traveling and studying abroad for Chinese people in the short term, which they could not afford before. Luxury goods can now be purchased "at will"; however, in the long run, the disadvantages caused by this will be harmful to the country, the enterprise level, and the individual level.

In recent years, the United States has continuously pressured the appreciation of the renminbi to achieve the purpose of hollowing out China, forcing funds to flow into the empty stock market, real estate market and financial industry, so as to follow in the footsteps of Japan. This approach of the United States can be described as "wolfish ambition" and we must be vigilant.