General

Recently, the RMB exchange rate against the US dollar has continued to fall. On June 26, the onshore and offshore RMB exchange rates against the US dollar both fell below 7.23, a new low since the end of November 2022.

Although the RMB exchange rate rebounded on the 27th, it fell again on the 28th. On the afternoon of the 28th, the offshore RMB exchange rate fell below 7.25 to 7.2523 at 16:30 p.m., down nearly 300 points during the day. The onshore RMB closed at 7.2455 against the US dollar at 16:30, down 354 points from the previous trading day.

The continuous decline of the RMB will undoubtedly give the price of made in China more advantages, and will also increase the profits of enterprises in the short term. Under the general trend of shrinking global demand and slowing foreign trade growth, what trend will China's international trade exports show due to the decline of the RMB?

The next three to four quarters are the traditional peak season for foreign trade. In his view, even if the peak season is not prosperous, orders will increase compared with the first half of the year.

"(the decline of the RMB) must have an impact. Customers place orders faster." matongwei, general manager of Shandong ruitu Laser Technology Co., Ltd., said that their recent international trade exports increased by about 30% year-on-year. The customer orders faster. However, due to the rapid growth of China's laser equipment industry, the growth rate of 30% is still lower than expected in Ma Tongwei's view.

Liumingyang, general manager of Yiwu Ouchi import and Export Co., Ltd., said that the company's recent export growth was as high as about 40%, and the decline of the RMB did make the prices of Chinese exported products cheaper. However, the growth is not mainly driven by the exchange rate. If we want to estimate the impact of the decline on the order increment, he thinks it is about 3% -5%. The motivation for growth also lies in finding high cost-effective products required by the market with the help of cross-border e-commerce and big data.

Shrinking demand and "Involution"

The weakening of the RMB will bring short-term benefits, but it is market demand and industry competition that ultimately determine the quality of international trade.

The person in charge of an "invisible champion" enterprise in the kitchen utensils industry in Ningbo said that this is certainly good for the profits of orders, but it is not really good for enterprises to take orders.

He pointed out that the impact of interest rate hike in the United States is very large, and consumers in Europe and the United States have begun to choose to save more like the Chinese, and the overall consumption is depressed. With the market pie shrinking, the "Involution" of China's supply chain has become increasingly fierce. There is no lack of low-cost competition on some overseas e-commerce platforms in China, so that many Chinese brands trying to pursue quality and in the process of transformation and upgrading have to be involved in vicious competition and lose their advantages, "It is the fierce competition between Chinese people. Many small and medium-sized businesses are actually losing money in the European and American markets, and have broken the original market rules.".

The data shows that after the growth rate of international trade exports returned to double digits in the first four months, the growth rate of China's foreign trade has dropped recently, and the market is not optimistic about the next trend of foreign trade.

However, weijianguo, former Vice Minister of the Ministry of Commerce and member of the senior expert advisory committee of the China Center for international economic exchanges, publicly said on June 19 that the current decline in international trade exports is not due to the failure of China's international trade. The most important thing is countercyclical. Last year, the Federal Reserve raised interest rates, which led to the rise of retail prices in the United States and the reduction of people's demand.

Exchange rate in the second half of the year is expected to

"What I fear most is going up and down." jinchonggeng, deputy general manager of Zhejiang Ginza luggage Co., Ltd., believes that the decline of the RMB is good for enterprises in the short term, but not necessarily in the medium and long term. A stable exchange rate is always what foreign traders expect most.

So, what will the exchange rate show next? Industry insiders generally expect that the RMB exchange rate will be under pressure in the short term, but it does not have the basis for continuous sharp depreciation. It is expected that the RMB exchange rate will strengthen again in the second half of the year.

CICC research report pointed out that the current economic expectations, the dollar index and other internal and external factors have begun to change positively, which will help the RMB exchange rate get rid of the previous weakness. However, negative factors such as upside down interest rate differentials between China and the United States and seasonal foreign exchange purchases still exist. Therefore, it is expected that the RMB exchange rate may experience a period of low stabilization and bottoming in the future.

"With the positive fiscal and monetary policies gradually gaining momentum, China's policy dividends and economic vitality will be gradually released in the second half of the year, and the economic growth will steadily pick up. At present, the euro area has fallen into a technical recession, and the economic growth of the United States is also gradually falling back. The gradual recovery of China's economy will give more support to the RMB exchange rate." wangyouxin, a senior researcher at the Bank of China Research Institute, predicted that after the short-term consolidation of the RMB exchange rate, It will gradually stabilize and return to a stable fluctuation range in the third quarter, and may further rebound to a relatively reasonable point before the end of the year.

Zhoumaohua analyzed and pointed out that although the recent fluctuation of the RMB exchange rate has increased, the RMB exchange rate has not deviated from the reasonable range, market sentiment has remained stable, and the flexibility of the RMB exchange rate has increased significantly from the perspective of macroeconomic indicators and the basic balance of international payments. From the perspective of internal and external environmental trends, we will continue to see the trend of the RMB exchange rate. In the second half of the year, the RMB exchange rate is expected to continue to fluctuate in both directions near a reasonable equilibrium level.