The Impact and Countermeasures of RMB Appreciation on Export-Based Enterprises in China

Abstract

RMB appreciation will pose a challenge to export-based enterprises in China, and bring a sense of crisis to them. Therefore, China's export enterprises should take active measures to deal with the impact caused by the RMB appreciation, so that export-oriented enterprises can better adapt to the changes in the global economy, thus materializing their sustainable and stable development. Keywords: RMB appreciation, Export-based industries, Pros and cons, CountermeasuresThe appreciation of the RMB has become much-discussed focus in the international economy and society. China has begun to implement the managed floating exchange rate system based on market supply and demand, with reference to a basket of currencies. RMB exchange rate is no longer pegged only to the U.S. dollar, and instead China has formulated a more flexible RMB exchange rate mechanism. RMB appreciation will pose a challenge to export-based enterprises in China, and bring a sense of crisis to them. Therefore, China's export enterprises should take active measures to deal with the impact caused by the rising Yuan, so that export-oriented enterprises can better adapt to the changes in the global economy, thus materializing their sustainable and stable development.In June, 2008, the exchange rate of RMB against the U.S. dollar exceeded the 7:1 boundary. The trend of a Yuan's rise is foreseeable, and in the irreversible environment, we must take appropriate steps to prevent large fluctuations in RMB to mitigate its negative impact on the import and export trade, while at the same time making full use of the small rise in yuan to promote trade development. Yuan's rise is not only conducive to a decrease in import costs and domestic inflation, stimulation to consumption, acceleration of structural adjustment, promotion of foreign investment and the reduction in trade friction, but in the short term will also have a negative impact on exports, influencing foreign investment and employment.