The Appreciation of Rmb

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[pic] Guangdong University of Technology School of Management Term Paper of International Business The influence of the RMB appreciation on China’s external trade and countermeasures Group No.: Team 9 谢奇(3211004310) 黄静君(3211004300) 黎启翠(3211004301) 严佳杰(3111004291) 陈伟场(3111004280) June 20th, 2013 Content Abstract 2 Introduction 2 Advantages 2 Disadvantages 3 Measures 4 Conclusion 6 References 6 Abstract: Recently, the appreciation of RMB has been a hot topic and caused a heated debate. For China, it not only involves the changes in the RMB revaluation, but also affects China 's external trade. Through reviewing the RMB…show more content…
In a market economy, the fluctuation of the foreign exchange rate involves the international balance of incomes and expenses and is an important price indicator. The appreciation of the RMB means that the price of various domestic resources, especially land and labor, will go up in relative terms and this will speed up necessary adjustments to the commodity mix and domestic industry. RMB appreciation will gradually change the value of the international and domestic markets. Domestic enterprises will rely more on sales to the domestic market so that national economic growth is less dependent on export demand and a more reasonable industrial structure will form. Secondly, it will promote technical innovation. In many countries, technical innovation relies primarily on a market mechanism which makes good use of price as a lever. China 's production process is enormously costly in terms of resources and energy, and labor is too cheap. The appreciation of the RMB will cause an increase in the domestic prices of such things as land and labor as well stimulate the demand for innovation. Products for export must rely on technological innovation to be more competitive internationally. In the domestic market, enterprises are also forced to compete through technological innovation. Simply speaking, the appreciation of the RMB will cause the formation of a market environment that is conducive to speeding up technological
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