Benefits of RMB appreciation to the common people

1. The living expenses of the common people will gradually decrease. This is mainly caused by two aspects. First, the RMB price of imported goods will fall, making it cheaper to purchase imported goods. Second, the prices of domestic related products will drop. Due to the falling prices of various imported goods, domestically produced related products have to lower their prices, otherwise they will lose their market. The price reduction of domestically produced related products will promote people's consumption and will always drive down residents' living costs, especially fuel prices. At present, more than 40% of my country's oil depends on foreign imports. The appreciation of the RMB will reduce the cost of oil imports. It should be pointed out that the appreciation of the RMB has now reached 18.14%, and domestic prices have shown signs of significant decline. In the long run, with the increase of imported goods and the increasing abundance of goods in the domestic market, prices will become cheaper relative to the growth of income, and the proportion of people's living expenses in their income will continue to decline.

2. The cost of traveling and studying abroad has dropped. After the RMB appreciates, the most intuitive feeling is that the money in our hands becomes "more valuable" because the existing RMB can be exchanged for more foreign currencies, so overseas consumption such as traveling abroad and studying abroad will be more affordable. The appreciation of the RMB is the biggest beneficiary for them.

3. Entrepreneurship opportunities for ordinary people have increased. RMB appreciation can reduce the import costs of Chinese private enterprises. , reducing the difficulty of survival for private enterprises and increasing entrepreneurial opportunities. It is obvious that RMB appreciation can save costs for importers. Domestic manufacturers and importers calculate costs through RMB. After RMB appreciation, the RMB cost of purchasing the same amount of foreign exchange is reduced, which means cost savings. This will make production more convenient for private enterprises, and the reduction in investment will inevitably lead to an increase in the entrepreneurship rate. At the same time, the appreciation of the RMB is beneficial to the cross-border investment activities of Chinese private enterprises. The appreciation of the RMB will indeed help reduce the costs of overseas investment and mergers by Chinese private enterprises, thus mobilizing domestic enterprises to expand their overseas investment activities. However, under the premise that the RMB is not freely convertible and the current foreign exchange settlement and sales system is maintained, similar to the situation of saving import costs for importers, it will eventually be settled into foreign exchange for foreign investment. It is very beneficial to save costs for private enterprises.

2. The appreciation of the RMB has also had a negative impact on the people

1. It has affected the employment of the people. The impact of RMB appreciation on people's employment is mainly reflected in two aspects: First, reduced exports will reduce the international competitiveness of Chinese goods, causing already employed people to face the risk of unemployment at any time. The appreciation of the RMB will increase the dollar price of export products, resulting in a reduction in export volume. Most of the products exported by my country are labor-intensive products with low technical content. At present, many labor-intensive products in China are subject to fierce competition from foreign products. In order to maintain the international competitiveness of export products, there is little room for operation to increase the selling price of goods after the appreciation of the RMB. After the appreciation, the dismissal is likely to be significantly reduced. It affects the profit level and international competitiveness of exporters and does not help much in improving the terms of trade. At the same time, this labor-intensive product has created a large number of jobs. The textile and clothing industry alone employs 15 million people, and behind them there are 100 million farmers engaged in planting and animal husbandry who provide raw materials. Exports are blocked. This will inevitably lead to a reduction in the number of workers employed by export enterprises, which will in turn lead to an increase in the unemployment rate. Second, a decrease in foreign direct investment leads to a decrease in the number of new jobs provided, which leads to a decrease in the number of new jobs provided. At present, the new job opportunities provided by our country are mainly export and foreign trade enterprises. After the RMB appreciates, the investment costs of foreign investors in China, such as investment in building factories, purchasing equipment, and labor costs in China, will increase significantly, which will reduce foreign investment opportunities in my country. Therefore, the employment increment provided by foreign-invested enterprises will decrease. In recent years, more than 15 million young people have turned 18 every year in our country. There are still about 7 million laid-off workers in cities and about 150 million surplus laborers in rural areas. When the economy grows at 9.5%, the number of jobs that can be added every year is only 10 million, which means that a large number of people have nothing to do every year. RMB appreciation will make my country's employment problem worse.

2. The pressure to buy a house has increased significantly. Currently, there is a large amount of speculative capital in the world looking for profit opportunities. The appreciation of the RMB will inevitably attract these speculative capitals to copy the RMB. The highest figure currently guessed by economists is US$100 billion, of which a large amount of money has participated in the speculation of my country's real estate market. According to statistics from the Shanghai Branch of the People's Bank of China, the proportion of overseas funds directly flowing into Shanghai's real estate market exceeded 50% in 2007. This can easily form a real estate bubble in our country. In recent years, real estate prices in our country have been on the rise. Foreign investors who choose to purchase Chinese real estate can not only earn exchange rate differences, but also earn other benefits. At the same time, the appreciation of the RMB will reduce the prices of raw materials in the real estate industry, such as steel, cement and energy. For these industries, because many of them involve overseas procurement, such as oil, iron ore, etc., after the RMB is released, the cost of overseas procurement will be reduced, which will affect the price reduction of the entire upstream tourism industry and help the real estate industry to reduce costs. This will also lead to growth in real estate investments.

At present, China's real estate market has attracted many international "speculators" to enter the market. In all aspects of China's real estate development, intermediary, consumption and other aspects, foreign capital is becoming increasingly active. For example, overseas individuals have purchased dozens or even more units in some coastal cities in China. Hundreds of houses have become commonplace. A large amount of foreign capital is buying up China's real estate industry, which will surely stimulate further rise in real estate prices and increase the pressure on ordinary people to buy houses. For urban residents with a certain amount of wealth accumulation, there are few investment channels, the stock market has been sluggish for a long time, and savings interest rates are low or even negative. Many people maintain and increase the value of their personal assets by purchasing real estate. In recent years, almost everyone who has bought a house has made a profit. In addition, banks have focused on making profits on personal home purchase loans, which has objectively promoted the rise in housing prices. The ability of ordinary people to purchase houses will be greatly reduced.

3. The expected income of ordinary people has dropped. RMB appreciation will affect people's income through three channels. First, farmers’ incomes have dropped due to reduced exports of agricultural products. The quality of most of my country's agricultural and sideline products is not high, and the state has repeatedly raised the prices of agricultural products in order to increase farmers' income. The export prices of agricultural products have no competitive advantage. The appreciation of the RMB has the greatest impact on agricultural exports. Second, the reduction in profits of export companies has led to a decline in wages. The appreciation of the RMB has led to a decrease in export volume. To maintain the same export volume, the only way is to reduce prices. This means that the profits of export companies will decrease, which will inevitably reduce the wages of employees. The vast majority of workers employed in the export sector are migrant workers, and foreign businesses mainly employ migrant workers. Therefore, farmers are the ones who are hardest hit. Third, wages have fallen due to the shrinking tourism industry. As the RMB appreciates, it becomes cheaper to travel abroad, and some people replace domestic travel with overseas travel. As the RMB appreciates, the price of domestic tourism rises relative to that of foreign tourism, and there are fewer foreign tourists. Therefore, the appreciation of the RMB will lead to a downturn in the tourism industry, which will definitely affect the income of people engaged in the tourism industry.

4. Personal wealth may shrink. As the RMB appreciates, foreign currencies depreciate relative to it, which will put the foreign exchange assets held by the people at risk. At present, the RMB has appreciated by 18.14%, and the foreign exchange assets in the hands of ordinary people have shrunk by 18.14% accordingly. The current bank interest rates for one-year U.S. dollar and Hong Kong dollar deposits are only 1.125% and 1% respectively. Therefore, foreign exchange deposit banks will lose 5% a year. above.

As can be seen from the previous analysis, RMB appreciation will do more harm than good. However, due to the rapid growth of my country's economy, there is an inevitable trend of RMB appreciation. At the same time, pressure from the international community is getting tighter. Weighing the pros and cons, the loss will be greater if the RMB does not appreciate than if it appreciates. In order to minimize the impact of RMB appreciation on China's economy and people's lives, the Chinese government has taken various measures to slow down the appreciation of the RMB. Our government should have firm determination to maintain the relative stability of the RMB in the short term, and gradually liberalize the value of the RMB as the exchange rate system and related systems are improved. This is also a reflection of our country’s independent external image.