RMB Appreciation Drives Textile Export Enterprises To Accelerate Pformation

December 31, 2010 interbank

The full appreciation of the renminbi will have a fundamental impact on mainland China's future manufacturing.

Traditional labor intensive in mainland China

Mainland China will face the risk of asset inflation and excessive appreciation of RMB over a long period of time. It can be said that the appreciation of the renminbi will force the manufacturing industry in mainland China to accelerate its pformation.

The textile industry is a traditional labor-intensive industry in the mainland of China. The export of textile industry has always played an important role in China's export. In the past, cheap labor was the main factor, making the textile industry's export profits considerable. The labor productivity and value added rate of manufacturing industry in mainland China were relatively low, about 4.38% of that in the United States, 4.37% in Japan and 5.56% in Germany.

In the past, most of the export products of China's textile industry were "three low" products with low technology content, low unit price and low added value.

The development of China's textile industry is facing unprecedented challenges. It has become increasingly difficult to continue with the low wage, high energy consumption and high export tax rebate subsidies. With the rise of raw materials and the rapid appreciation pressure of the RMB exchange rate, China's textile industry has been struggling.

In the exchange rate dispute and trade encirclement and suppression, the international external environment faced by mainland China in the future will also undergo profound changes.

China's textile pformation must focus on solving three major problems: one of the problems is to change the over dependence of the mainland's economic development on the export market and tap the potential of the domestic market. Two of the problems must be shifted to promoting the upgrading of the textile industry and upgrading of technology, so as to avoid the mainland's economy being locked in the development of labor-intensive industries with low added value and simple technology. Three of the problems, on the issue of foreign direct investment in mainland China, in addition to the profit maximization of the enterprises, the balance of payments effects of foreign direct investment in China's land will be offset by foreign direct investment.