Opportunities for RMB appreciation

Source: Internet
Author: User
Keywords Opportunity RMB
The Shi of the renminbi's exchange rate has made America's politicians talk-show again, blurted out "how China manipulates its currency" and "how American jobs are undervalued by the renminbi '." But no matter how noisy the scene, in fact, everyone understands that the yuan's sharp appreciation in the short term has a huge impact on China and may not be good for America's economy and employment.  In the long run, the renminbi has become a stronger trend, but this process can not be accomplished overnight. China insists on its own principle of currency exchange, and will not succumb to external pressure. A more popular view is that, for some time to come, the two-way float of the renminbi will become more frequent, will become larger, and even continue to record the new highs since the exchange. This may be a gesture to the outside world, but also highlights the trend of China's exchange rate marketization.  The exchange rate issue is destined to have a significant and profound impact on China's production enterprises and economic structure, and this round of appreciation in the process of economic recovery, its role will be more significant. From 2006 to 2008, the renminbi has risen by 21%. Observers have found that China's export sector is more capable of withstanding than imagined, and some industries and businesses are even more prosperous.  This is mainly due to the large number of related enterprises from foreign imports of equipment and raw materials, although the appreciation of the renminbi has increased in foreign currency-denominated export prices, but also reduced production costs. Of course, production companies that rely purely on their cheap labor and raw materials will still be hit by the appreciation of their currencies. The profit margins of these enterprises may be only 2% to 3%, the impact of the continued appreciation of the renminbi can be imagined. However, such enterprises may be precisely the domestic economic restructuring needs to be phased out.  Some countries with lower production costs will gradually absorb these industries that have little meaning for China. A VC boss in a recent forum said that he wants to invest in the industry must be the condition is that the industry has a certain threshold in technology, but not too complex, in line with China's current scientific research and education level. This statement should be a more popular explanation of China's advantage over other emerging market countries. But he has yet to mention high-speed rail and road networks, which are spread across the country. A comparison of India's situation makes it clear how obvious China's infrastructure advantage is.  These have become a strong guarantee against the negative effects of currency appreciation. In the long run, the renminbi will embark on the path of appreciation, and the appreciation will eventually promote China's domestic economic restructuring and industrial upgrading. On the other hand, with the increase in purchasing power, the consumption level of domestic consumers will also be promoted, thus driving the development of related industries. Following this vein, keen investors may have already sketched out a strategic picture in the A-share market.
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