| Can RMB devaluation encourage exports? | |
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| Nov 12, 2008 02:40 |   |
 | China's trade surplus has soared 30 percent in October to $35.2 billion, a new high for a third straight month. However, its exports have been greatly affected by global financial crisis. Yesterday, Zhou Xiaochuan, the president of the People's Bank of China said that China might devalue RMB to stimulate its exports in order to keep its economy grow. Is this a good idea? Mr Lu, an economist, says that exchange rate devaluation will benefit those export companies in all industries. It also can lessen the burden of government finance. However, I wonder if RMB devaluation will scare away those investors in China. What do you think? |
| Nov 12, 2008 04:26 | #1 |
| One of the outcomes of the present crises has been the appreciations of the RMB to where it should be in regards to the strength of the economy. The West has been saying for some time that it was undervalued. Not necessarily my view but information given to me. Dodger. |
| Nov 12, 2008 13:39 | #2 |
| Devaluation was the tool Finland used before the depression early 90´s. After joining the EU it has not been possible. Finnish economy did significant growth and when problems came, then just devaluated. And the wheel turned again. Devaluation RMB might be good for Chinese export companies, but thinking of the worldwide situation the possible turn up would perhaps move farther. Also may be that the West is not ready to increase its import significally, because people are careful with money just now. In that case devaluation of RMB would be inconsequential. If so, that might even cause great losses to Chinese economy. Carlos |
| Nov 12, 2008 20:43 | #3 |
| The western countries will cry again. They have complained that Chinese Yuan appreciates too slowly. If China devalues RMB, they might go mad. |
| Nov 13, 2008 01:58 | #4 |
| Heh, worth to try then, huh? Just for fun..... Carlos |
| Nov 20, 2008 21:02 | #5 |
| GUEST18210 | i have decent source that say rmb 7.45 soon. |
| Nov 22, 2008 23:38 | #6 |
| With the appreciation of Yuan, many small traders and importers are slowly looking for alternatives besides China, while manufacturing sectors that import materials from China, after beginning to feel the pinch, are trying to produce products with local contents. For example, previously a PVC door costs approximately 200RMB per piece, while locally produced will be about 230RMB; now that door costs 250RMB from China. With the current global economy crisis, I am sure the manufacturers will have a tough time ahead. The statistics may show the soaring surplus, but why some factories are closing down and emplyees are retrenched? Anyway consumers have the final say. Wan |
| Nov 24, 2008 03:22 | #7 |
| The statistics may show the soaring surplus, but why some factories are closing down and emplyees are retrenched? Wanhu, China's exports have been greatly affected by the financial crisis. I guess that many factories that have closed are export factories. As for other industries, they are not affected too seriously. The Chinese goverment has raisen the tax rebate to encourage exportation. However, it doesn't work very well. |
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