who has a good idea about RMB's upvaluation?

**schumi** · 08-22-2007 11:05 PM

exchange rate of RMB rises all the time,
i'm not sure the influence to China economy and the world ,although as a trend no one can change ,but whether it's profit or harm to you?any importer and exporter can give your ideas
or your experience!
thanks.

**teabenny** · 08-23-2007 08:17 AM

Well, the RMB is still pegged to the US dollar. It is of course artificially devalued by the Chinese government. Should it float, its value will rise considerably. But don't expect that in the short term.

If the value goes up, China's export economy would be severely affected. The price of exports will go up. But given that China is already so cheap anyway, maybe it won't be a big deal. Who knows?

**schumi** · 08-23-2007 07:38 PM

thank you !
Chinese government tries to expand the inland need all the time ,and export hasn't been the only choice tha must be controled ,but seems to be not that successful so far,i think this is the key point,isn't?

**teabenny** · 08-23-2007 09:09 PM

Until domestic demand can realistically make up for a shortfall in export earnings, the RMB isn't going anywhere. China can't afford the buffeting to its export industry that a floating RMB would cause.

The 1-child policy, I believe, is actually going to hold back domestic demand. When you think that 1 kid has to support two parents and four grandparents in their old age, plus his own retirement, then the high savings rate in China is going to continue. Especially in the absence of any social welfare. Young professionals really only have a short window to enjoy their earnings before they need to start putting it away for the future.

The US will complain about the artificial devaluation, but they won't do anything about it. Too much US industry is tied up in China now, they'll never allow the politicians to jeopardise it.