Keywords: positive impact of exchange rate appreciation, negative impact
Under the background of world economic integration, exchange rate plays an important role in global resource allocation. As an important member of the world economic stage, the change of RMB exchange rate will affect the nerves of Asian countries and even the whole world. At present, China's economy is growing at a high speed, the balance of payments continues to double surplus, and foreign exchange reserves are increasing steadily. There are indications that there is a lot of room for RMB appreciation.
First, the background analysis of RMB exchange rate appreciation
First of all, judging from the current development of China's national economy, a strong economy will inevitably create a strong currency. Since 1990s, with the continuous improvement of national macro-control measures, economic fluctuations have decreased and entered the stage of sustainable growth. Especially in the current global economic slowdown, China still stands out, maintaining a high growth rate of 8%, which is the economic basis for the continued strength of RMB. Secondly, judging from the current balance of payments, there is a "double surplus" in the current account and capital account, foreign exchange income exceeds expenditure, foreign exchange market exceeds demand, and foreign exchange reserves reach 340 billion US dollars, showing a steady increase trend. At present, the balance of payments is basically flat, and there is no reason for RMB depreciation. Third, from the international environment, at present, the economies of the United States, Japan and Europe are in recession, and the whole world economy has slipped into a trough. The "9 1 1" incident made the already depressed world economy worse. The idea that the United States is the safest investment destination in the world has been challenged, while China, with its good economic development, stable political environment and huge market potential, has maintained its attraction to international capital and become a safe haven for foreign investors to avoid risks in the future. The expansion of the surplus under capital account will offset the possible decline in current account. The substantial increase in investment in China has provided strong support for the appreciation of the exchange rate. Fourth, from the perspective of domestic price level, prices have continued to fall since the macroeconomic tightening. After China's accession to the WTO, with the sharp drop in tariffs, the cost of imported goods will be further reduced, and the prices of many commodities will continue to fall. Low prices and low inflation rate are important factors supporting the steady strength of RMB exchange rate in the medium and long term.
Second, the positive effects of RMB exchange rate appreciation
The favorable impact of RMB appreciation on the economy is concentrated in the following aspects:
(1) is conducive to enhancing the confidence of all sectors of society in China's economy and currency. Pursuing profits and avoiding risks are the fundamental reasons for international capital flows. Whether foreign investors invest in China is not only a question of profit rate, but also an important factor to be considered. Since the collapse of the Bretton Woods system, the current international credit monetary system is extremely unstable, and both countries and individuals have objective needs to avoid risks. Rational expectation has also become an important factor affecting international capital flows. At present, the RMB can't compete with the US dollar and the Japanese yen on the international stage. Therefore, the first task we face is to build international confidence in the RMB. According to modern portfolio theory and rational expectation theory, the appreciation of RMB will send a signal to the whole world that the country's comprehensive strength will be enhanced and the economic situation will be good, which will help to enhance investors' confidence, thus improving people's expectations of government behavior and economic operation and making it easier and cheaper to refinance abroad.
(2) It is conducive to reducing the debt service burden. By the end of 2002, China's foreign debt balance was as high as $654.38+070.4 billion. Every RMB depreciation of 654.38+0% will increase foreign debt by $654.38+07 billion. On the contrary, every one percentage point appreciation of RMB will bring billions of dollars in foreign exchange surplus to China. In addition, China's medium and long-term debt is as high as over 80%.
(3) It is conducive to establishing the image of China as a responsible big country. Judging from the situation of neighboring countries, the economies of Japan and South Korea have continued to be in a downturn, and the once vibrant Asian Four Little Dragons have not completely emerged from the shadow of the financial crisis. Once the RMB depreciates, it will easily trigger a new round of competitive devaluation of Asian currencies, triggering international "currency wars" and "exchange rate wars". In addition, this beggar-thy-neighbor approach can easily lead to retaliation from trading rivals. In this way, the anti-dumping policy will lose its function, while the RMB will keep rising steadily, which will effectively push some Asian countries out of the predicament and have a very positive significance for the stability of the global economy.
(4) It is conducive to accelerating the process of RMB free convertibility. At present, China's RMB exchange rate management system is managed convertibility under the current account, but the capital account is not yet open. This is mainly to avoid the exchange rate risk in the international market. The slow appreciation of RMB exchange rate in the next few years will also create a good external environment for exchange rate reform, thus shortening the timetable for capital account opening. At present, RMB has become a hard currency in the surrounding areas. After the capital account control is liberalized, it will become a freely convertible currency.
Third, the negative impact of RMB exchange rate appreciation.
The exchange rate is a "double-edged sword", and the impact of its changes is often two-sided. The appreciation of RMB exchange rate will also bring negative effects:
(1) will have a serious negative impact on the growth of China's foreign trade exports. The appreciation of RMB will increase the foreign currency price of China's export commodities, directly weaken the price competitive advantage of China's export, affect the transfer effect in the process of dollar depreciation and the exertion of China's comparative advantage, and increase the difficulty for China to explore the international market. From the perspective of international division of labor, compared with developed countries, China, as a developing country, focuses on manufacturing. This trade structure is easily affected by exchange rate changes. From the perspective of the division of production factors, China, as a developing country, has the advantage of labor cost compared with developed countries in participating in the international division of labor with capital and technology advantages. As a dominant enterprise in China, labor-intensive enterprises have low product grade and low added value. If the RMB appreciates, the production cost and labor cost of exporters will also increase accordingly. Under the condition that the international market price remains unchanged, the decline in export profits will seriously affect the enthusiasm of exporters. RMB appreciation is good for China.
(2) It is not conducive to attracting foreign investment and upgrading the processing trade industry. The appreciation of the renminbi is likely to worsen the domestic investment environment, and the new overseas investment will be reduced, because such investment has become relatively expensive. At present, the operation of foreign enterprises in China has gradually entered a mature stage, and the requirements for the remittance of foreign profits are increasing year by year. The appreciation of RMB will increase the foreign exchange share of profits, which may increase the scale of capital outflow and put pressure on the balance of payments. This will affect the investment and profit of foreign-invested enterprises, as well as the scale and industry of reinvestment.
(C) RMB appreciation will increase the risks of domestic enterprises. China has always implemented the exchange rate system of RMB pegged to the US dollar. If RMB appreciates, it will increase the foreign exchange risk management cost of enterprises. From the point of view of production and sales, the change of exchange rate will cause the change of relative prices of imported materials and exported goods, which will inevitably affect the competitiveness of enterprises in the market. From the financial point of view, it mainly refers to the adjustment of assets and liabilities at risk. Change the strength and currency of net risk position, so as to realize the management of foreign exchange risk. If the exchange rate of RMB against dollar hard currency changes now, it will bring extra burden to many import and export enterprises, which will inevitably increase the cost of foreign exchange risk management.
(d) It will directly damage the equity of foreign exchange net assets. In the first half of this year, China's foreign exchange reserves increased to US$ 346.5 billion. If the RMB appreciates, it will definitely aggravate the real depreciation of the US dollar, resulting in a serious "shrinkage" of China's foreign exchange net assets. In addition, the appreciation of RMB will slow down the growth of China's foreign exchange reserves, which may be detrimental to the normal advancement of China's financial reform. In addition, the appreciation of RMB will further increase the actual amount of existing non-performing assets of banks (in US dollars).
(5) It is not conducive to alleviating the domestic employment pressure. When China needs to increase employment, RMB appreciation will affect the process of economic growth at a certain stage, and will gradually offset the import growth brought by RMB appreciation. Once China's economic growth is frustrated by the appreciation of RMB, and the economic growth is far below the economic growth potential, China's economy will eventually encounter deflationary pressure. At present, the foreign trade and economic cooperation industry has provided more than 70 million jobs. Domestic export enterprises and foreign-funded enterprises have also provided many new employment opportunities. The impact of RMB appreciation on export industries and foreign direct investment will eventually be reflected in employment, which is bound to have a certain impact on the improvement of the current employment environment.
(6) The appreciation of RMB exchange rate may cause further changes in market expectations, and may lead to market speculation, leading to the prevalence of speculation. Due to the rapid increase of national wealth in US dollars, the stock market and real estate reached a climax, the development of "bubble economy" and the continued expansion of polarization may hit the economic development, the economy will further slow down and the government will face various difficulties. Finally, for these reasons, the currency will depreciate again. The appreciation and depreciation of currency will make people.
It can be seen that the current negative impact of RMB appreciation presents two major characteristics. First, the scope is relatively wide, and appreciation will affect the stable development of international trade, attract foreign investment, employment, price and financial reform; Second, the intensity is relatively large. The negative impact of appreciation is directly related to the national economy and people's livelihood, and its intensity is obviously stronger than its positive effect. Therefore, in the face of the pressure of RMB appreciation, we should be more cautious, comprehensively study and actively respond.
Fourth, take measures to ease the pressure of appreciation.
Facing the expectation and pressure of RMB appreciation at home and abroad, China should keep the RMB exchange rate basically stable and take measures to alleviate the pressure of RMB appreciation.
(1) Improve the basis for determining the RMB exchange rate. The basis for determining the RMB exchange rate should gradually shift to the current account, while considering other factors, especially capital flows. Improve the RMB exchange rate formation mechanism. Gradually change the current system of compulsory settlement and sale of foreign exchange by domestic enterprises into a system of voluntary settlement of foreign exchange, establish a foreign exchange market for banks and enterprises, open major foreign trade enterprises to the foreign exchange market, expand foreign exchange trading entities, and increase the scale of foreign exchange transactions. Make the whole foreign exchange supply and demand clear the price effectively, and at the same time guide the price and adjust the supply and demand flexibly. Increase the flexibility of RMB exchange rate. It mainly includes relaxing the fluctuation range of the exchange rate, which can be adjusted from the current 3‰ to a fixed exchange rate of 1%, reducing the frequency of central bank intervention in the market, and adjusting the exchange rate level through other economic means. At the same time, the RMB exchange rate control target can be changed from pegged to pegged to a basket of currencies, including the US dollar.
(2) Maintain the total trade volume and structural balance. When observing WTO commitments and gradually reducing trade restrictions, we should be more cautious about the trade surplus of major trading partners, strengthen multi-bilateral cooperation in the region, enhance the ability to guard against financial risks, vigorously develop regional economic cooperation, and resist the possible impact of external market fluctuations by increasing the proportion of trade and investment in the region; Actively promote the Asian regional monetary cooperation mechanism, strengthen the self-circulation of Asian funds, enhance the ability to resist financial risks, and strive for greater room for manoeuvre for China in international economic and trade relations.
(3) Increase the reserve risk and strengthen economic security. Properly control the excessive growth of foreign exchange reserves and make better use of these reserve resources. First, establish a new mechanism for converting reserves into investment and capital into capital, and formulate a more active foreign investment strategy; Second, maintain the liquidity of foreign exchange reserve funds and seek long-term stable income on the basis of ensuring liquidity and capital preservation; Third, we should change the situation that most foreign exchange reserves are placed in US dollars and US debts as soon as possible, and increase the proportion of euros and other currencies in China's foreign exchange reserves; Fourthly, foreign exchange management departments should establish and improve the risk management framework in the process of foreign exchange reserve management. In view of the supply and demand situation in the foreign exchange market, foreign exchange restrictions under the current account should be further relaxed, including gradually abolishing the system of compulsory settlement and sale of foreign exchange by banks and relaxing foreign exchange restrictions such as tourism.
(4) improve the ability and level of monetary policy regulation and vigorously develop the financial foreign exchange market. The sharp increase in foreign exchange holdings has affected the stability of China's monetary policy, and the central bank is under great pressure to hedge foreign exchange holdings. At present, we should actively study the adjustment plan of the central bank's asset structure, study the possibility of revitalizing certain assets of the central bank, restore the flexibility of the central bank's asset structure, and strive to control the growth of the base currency at a moderate level to prevent the excessive growth of commercial bank loans. Efforts should be made to cultivate the RMB forward and futures trading market, vigorously develop exchange rate risk avoidance tools, and increase the means for enterprises to deal with exchange rate fluctuations to ensure the sustained and stable development of foreign trade and economic cooperation.