The first commodity to determine the exchange rate between China and the United States was Hamburg. If you buy a hamburger in the United States, it costs about 2 1 yuan to buy a hamburger in China, so the currencies of these two countries are 1:7. If the exchange rate is to be converted into 1: 1, American hamburgers must be sold for $3, and domestic hamburgers also need $3. However, in the current economic environment, 3 yuan RMB can't be sold in Hamburg in China. Therefore, if we rashly raise the exchange rate, I am afraid it will have a negative impact on the domestic economy.
Previously, foreign investors only needed 1 USD to buy products made in China. After the exchange rate rises, the exchange rate will rise by $6.3, and the advantages of China's manufacturing industry will disappear. As we all know, China is a big country in export trade. In 2020 alone, the export volume will reach 32 trillion yuan, with a trade surplus of nearly 4 trillion yuan. Most of the domestic growth comes from this part of foreign exchange income. Due to the decline of foreign competitiveness, domestic goods cannot be sold, and the inventory backlog of enterprises will become more and more serious, and the operators' funds will not be recovered. By then, a large number of production enterprises will face the risk of bankruptcy. China's nearly 3 trillion foreign exchange reserves will shrink seriously, because of these foreign exchange reserves, US dollars and US debt account for more than 70%. Once the exchange rate of US dollar against RMB becomes 1: 1, China will face very heavy losses.