General

On May 21 and May 23, the Financial Commission and the Central Bank successively voiced the RMB exchange rate. The Financial Stability and Development Committee of the State Council held a meeting and stated that the RMB exchange rate should be basically stable at a reasonable and balanced level. The central bank stated that maintaining the stability of the RMB exchange rate, two-way fluctuations will become the norm. On May 26, the central parity of the RMB against the U.S. dollar reported at 6.4099, a three-year high.

Exchange rate new high

Make the living environment of Chinese export companies worse

In the first quarter of 2021, China's foreign trade import and export achieved a good start, an increase of 29.2% over the same period last year. Among them, exports were 4.61 trillion yuan, an increase of 38.7%; imports were 3.86 trillion yuan, an increase of 19.3%; the trade surplus was 759.29 billion yuan, an increase of 690.6%.

The improvement of China's exports is mainly due to the severe epidemic in developed countries and some developing countries, which has affected their production and led to an outbreak of exports to China. This situation will gradually return to its original state after the epidemic is over. The good performance of the Chinese market and the rapid influx of cross-border funds under the linkage of stock exchanges have stimulated the strengthening of the RMB exchange rate.

In the context of the continued strength of the renminbi, consumer industries with foreign currency liabilities such as aviation and tourism will benefit significantly. Papermaking, refining, and other manufacturing and precious metal industries that are linked to import costs, such as gold refining companies, petroleum companies, and steel industries, are likely to benefit.

For Chinese export companies, the appreciation of the renminbi will create greater pressure, challenges and hidden dangers on the exports of small and medium-sized enterprises. When the exchange rate rises, exporting the same goods and receiving the same amount of U.S. dollars will reduce the amount of renminbi exchanged by the exporting company from the bank, and thus reduce profits.

From the fourth quarter of 2020 to the present, during the Trump administration, the additional tariffs imposed by the United States on Chinese exports have not been cancelled; ocean freight has continued to soar since last year; early 2021, including glass, cement, ore, coking coal, wire rod and other bulk raw materials Commodities have soared one after another, making the living environment of Chinese export companies worse. Now that the renminbi continues to appreciate and hit a new high, this is undoubtedly worse.

Will the exchange rate trend set a new high during the year?

In recent years, the RMB exchange rate has gradually become market-oriented, and the central bank has gradually withdrawn from normal intervention. The two-way fluctuation of the RMB exchange rate has increased and the exchange rate flexibility has increased. The central bank reiterated that the People's Bank of China has perfected a managed floating exchange rate system based on market supply and demand, adjusted with reference to a basket of currencies, and this system is suitable for China's exchange rate system arrangements at present and in the future. The People's Bank of China will focus on expected guidance, play the role of exchange rate adjustment macroeconomic and automatic balance of payments stabilizer, and maintain the basic stability of the RMB exchange rate at a reasonable and balanced level.

What will happen during the year and whether it will reach a new high will depend on the economic recovery of various countries and the development of China’s economy. If the economic recovery of countries around the world meets expectations or even exceeds expectations, and China’s economy maintains its basic status quo, the RMB exchange rate will have It may fall. And if other countries in the world, especially the world’s developed economies, fail to recover as expected, the European and American economies are in a downturn and only China’s economy is thriving, the RMB exchange rate may also rise sharply.

Sit and wait, or seize new opportunities?

Under heavy pressure, Chinese export companies should seize the opportunity to dictate exchange rate dynamics at all times to avoid the loss of production, operation and life caused by exchange rate changes.

Whether Chinese export companies can innovate well in marketing, mobilize to stimulate marketing transformation, and take the lead in new ways has become particularly important. Who can take the lead in transforming marketing strategies and embarking on digital marketing transformation will be able to take the lead and gain new advantages for long-term development.

New opportunities, new patterns and new journeys

On May 10, the China-Europe Cross-Border Cooperation Forum, jointly sponsored by the China Association for Trade in Services and the Zhengzhou Municipal People's Government, was held at the Zhengzhou International Convention and Exhibition Center, which collided new understandings of the import and export market. On May 23, Shanxi merchants and talents at home and abroad gathered in Shanxi to focus on the transformation and development of central China. We continue to hear the voice of "transformation and development, high-quality development".

China is the EU's largest trading partner and the EU is China's second largest trading partner. China and the EU are each other's important destinations for foreign investment. Accompanying the negotiation of the China-EU Investment Agreement will greatly promote the development of China's foreign trade.

In terms of trade, RCEP is playing an increasingly important role in the world trade structure. Due to early start, close economic and trade exchanges, more Chinese and overseas Chinese, and policy support, RCEP is a fast-developing area of RMB internationalization, and has achieved success in RMB cross-border settlement, offshore market construction, and bilateral currency cooperation. More prominent progress.

RCEP countries are important areas for RMB cross-border settlement. According to the "Renminbi Internationalization Report" issued by the People's Bank of China, Hong Kong, China has been the most important cross-border settlement area for RMB in the past, but its share dropped from 52.7% in 2014 to 44.9% in 2019. Within the scope of RCEP, Singapore, Japan, and South Korea are the countries that conduct more RMB cross-border settlements. In 2019, the proportion of the three countries in RMB cross-border settlement rose to 10.3%, 3.1%, and 2.3%, respectively. In addition, Australia, Vietnam and Malaysia in the ASEAN region are also countries that use RMB for settlement. As of 2019, China has signed currency swap agreements with 39 countries and regions, and the scale of currency swap cooperation has reached 3.7 trillion yuan.