Thesis: The impact of exchange rate changes on Zhejiang export enterprises and their countermeasures

The profound impact of RMB appreciation on Zhejiang’s economy and its countermeasures

RMB appreciation is a long-term trend and is generally beneficial to Zhejiang’s economy. The central bank announced the appreciation of the RMB on July 21, marking another important step in the enhancement of comprehensive national strength and market-oriented reform. It is likely to mean the arrival of a new period of development and reform.

1. Macroeconomic background of RMB appreciation

1. RMB appreciation is an inevitable trend for the enhancement of China’s productivity

Since the reform and opening up, the RMB exchange rate has experienced from depreciation to An inverted U-shaped change process of slow appreciation (see Figure 1). Since 1994, the RMB has entered a long-term slow appreciation phase. It was around this year that China's economy experienced a major change from a seller's market to a buyer's market. From the perspective of macro indicators, the price index of the whole society has begun to decline; and from the perspective of system, non-state-owned enterprises have begun to fully replace state-owned enterprises. The reversal of the RMB from depreciation to appreciation shows that on the one hand, the RMB has returned to its real exchange rate after long-term depreciation, and on the other hand, the continued rise in productivity levels supports the continued appreciation of the RMB.

Increased productivity will inevitably lead to a stronger local currency. Driven by both institutional changes and technological progress, my country's economy has developed rapidly. From 1978 to 2004, my country's economy grew at an average annual rate of 9.4%, and its nominal GDP in RMB increased by 21 times. Especially since the 1990s, labor productivity has increased significantly faster than that in the United States. From 1990 to 2001, China's labor productivity increased by 6.75 times, and after deducting price factors, it increased by 3.58 times; in the United States, it increased by 1.52 times, but after deducting price factors, it only increased by 1.29 times. Increased labor productivity has led to cost reductions, and Chinese companies have actively improved product quality and grade. The competitiveness of goods has significantly increased, attracting great demand for Chinese goods from developed countries and regions such as Europe, the United States, and Japan, which in turn has triggered a surge in China's foreign exchange The surplus continues to rise.

Since 1994, my country’s balance of payments current account and financial capital account surpluses have been growing (see Figure 2), forming a dual surplus situation. In 2004, my country's balance of payments surplus reached a cumulative US$636.8 billion. The exchange rate is the price of a currency, determined by the supply and demand of domestic and foreign currencies in the foreign exchange market. If the demand for RMB in the foreign exchange market exceeds the supply of RMB, the RMB will face appreciation pressure, and vice versa. my country's economy has continued to grow for more than ten years and has accumulated an international balance of payments surplus of more than 600 billion U.S. dollars, creating a huge demand for RMB in the foreign exchange market. Driven by this demand, RMB appreciation has become an inevitable choice.

At the same time, the double surplus in the balance of payments that has lasted for more than ten years has caused my country's foreign exchange reserves to continue to increase. As of June this year, my country's foreign exchange reserves have reached US$711 billion. Although this is due to international speculators, the incentive is the expectation of RMB appreciation triggered by the increase in national strength. The huge foreign exchange reserves far exceed the safety reserves based on normal needs, and thus further increase the pressure for RMB appreciation. Holding excessive foreign exchange reserves will affect the independence of my country's monetary policy and will also cause a decrease in factor allocation efficiency. In particular, the yield on U.S. Treasury bonds is far lower than the yield on foreign investment in China (the difference is about 10% ), a large amount of profits were made by foreigners. In this context, increasing the value of the RMB will help overcome distortions in resource allocation.

2. RMB appreciation will not make the same mistake as Japan

Some people like to cite the Japanese case to illustrate the adverse consequences of currency appreciation. Some people have politicized this and said that suppressing the appreciation of the local currency is a conspiracy by the Americans to bring down a country's economy. In fact, these are unconvincing.

It should be said that the appreciation of the yen is not the culprit of Japan's current economic downturn. The appreciation of the yen began on August 26, 1971, when Japan switched from a fixed exchange rate system pegged to the U.S. dollar to a floating exchange rate system. On December 8 of that year, in accordance with the Smithsonian Agreement, the Japanese yen appreciated from 360 yen to 1 U.S. dollar to 308 yen to 1 U.S. dollar. Prior to this, Japan had experienced 15 years of rapid economic growth from 1955 to 1970. However, after that, from 1970 to 1990, Japan's average annual GDP growth rate was still as high as 9.2%. From the chart below, we can intuitively see that after 1970, the yen continued to appreciate, but Japan's annual GDP growth remained relatively stable at around 8%, with the highest year being 21.8% and the lowest year being 4.1%. After 1990, Japan's bubble economy burst and its economic growth rate has been low. This is a very complex economic phenomenon with many reasons.

On the issue of RMB appreciation, comparing the Japanese economy to the Chinese economy actually ignores two huge differences between the Chinese and Japanese economies. One is the difference in domestic demand. China is a large country with a population of 1.3 billion and its domestic market has huge potential. Multinational companies investing in China are also interested in China's huge market resources. Therefore, after the RMB appreciates, even if exports are affected to a certain extent, the lack of total demand can be made up by developing the domestic market. Japan is a small country with limited domestic demand. In particular, the Japanese government has long adopted policies to protect the interests of domestic agriculture and small and medium-sized enterprise owners, which further leads to the lack of strong competitiveness in the overall economy. The second is the factor cost difference.

Japan is a typical country with small resources. Rapid economic growth has led to a sharp increase in domestic factor prices. The most typical example is the rapid increase in the average cash income of employees. In 1970, the average monthly income of Japanese employees was 76,000 yen. In 1990, it rose to 370,000 yen, an increase of 4.9 times. If calculated in US dollars, it increased 13.0 times [1]. Rising costs have weakened competition among Japanese goods. force. Although China is not rich in natural mineral resources, labor prices will have a strong competitive advantage in the long term.

3. Why is it so difficult to appreciate the RMB?

Since the end of 2002, the RMB has been facing explicit pressure to appreciate. Especially after the central bank raised interest rates in October 2004, the appreciation pressure further intensified. big. In fact, during the Asian financial crisis in 1998, the RMB faced mainly appreciation pressure. It took more than three years from the time the RMB faced appreciation pressure to the time it began to appreciate, which reflects a difficult policy decision for RMB appreciation. There are two main reasons for this.

First of all, it is difficult to judge the result of appreciation. Economic operation is a complex process of interrelation and mutual influence. We can only give a rough expectation of the impact of RMB appreciation, and it is difficult to make specific quantitative judgments. But what is certain is that the appreciation of the RMB will definitely "affect the overall situation." If an uncontrollable situation occurs, it will cause huge economic and political problems. Therefore, the adjustment of RMB exchange rate must be comprehensively considered, coordinated and carried out with great caution. Especially at this stage, a large amount of international hot money has entered the country to gamble on the appreciation of the RMB. However, the domestic financial system and capital market are immature, and financial institutions have weak ability to withstand risks. In this context, the timing, extent, and method of RMB exchange rate adjustment need to be carefully selected. A slight mistake may cause huge economic fluctuations.

The second is the path dependence caused by the long-term underestimation of the RMB exchange rate. The RMB is undervalued, which gives the export sector a price advantage and creates a path dependence on low exchange rates for export companies. Many export companies rely on low prices to gain competitive advantages in the international market, and rely on "volume" to win large amounts of foreign exchange, forming huge vested interests. The appreciation of the RMB will almost certainly put greater pressure on export companies that rely on low-price competition, thus breaking the distribution of interests, which will inevitably lead to opposition from vested interest groups. Therefore, the appreciation of the RMB must coordinate the interests of all parties and handle the relationships between many parties.

2. The advantages of RMB appreciation outweigh the disadvantages

The impact of RMB appreciation has both advantages and disadvantages. From a macro and long-term perspective, if macroeconomic policies are handled well, the benefits of RMB appreciation outweigh the disadvantages. For now, the adverse effects of RMB appreciation are mostly short-term and local, and will not affect the overall economic development.

1. Export volume will not drop significantly.

First of all, international experience in exchange rate adjustment proves that the view that "exchange rate appreciation will definitely hit exports" has no empirical basis. Both Japan and Germany have experienced significant currency appreciation, but the exports of these two countries have risen instead of falling (see Figures 4 and 5). After the "Nixon Shock" in 1971, the exchange rate of the Japanese yen against the US dollar rose from 360:1 to 308:1. Afterwards, the yen gradually appreciated, rising to 231 yen per US dollar in 1984. At the same time, Japan's exports to the United States were on the rise. Calculated in Japanese yen, Japan's total exports to the United States in 1985 were 42.9 trillion yen, an increase of six times from 1970, with an average annual growth rate of 12.7%. The 1970s was the period when the German mark appreciated the fastest. The bilateral exchange rate appreciated from 3.68 marks to 1 US dollar in 1970 to 1.73 marks to 1 US dollar in 1979, a cumulative appreciation of 1.13 times. During this period, Germany's foreign trade exports increased. 1.5 times, and has always maintained a large surplus.

Secondly, Zhejiang’s export structure, which is dominated by industrial manufactured products, determines that RMB appreciation will not cause a sharp drop in exports. Export commodities are divided into two categories, one is primary products and the other is manufactured products. The primary products exported by developing countries have a high convergence rate and fierce competition in the international market. After the RMB appreciates, the export of primary products may be affected by this and decrease. However, judging from the situation in Zhejiang, the proportion of exports of primary products has been decreasing year by year, accounting for only 5.1% of total exports in 2003, so the overall impact on trade exports is not significant. The production of industrial finished products has international characteristics and requires a large amount of imported raw materials and machinery and equipment. After the appreciation of the RMB, the cost of imported raw materials and machinery and equipment for enterprises will be reduced, providing enterprises with a certain price reduction space and easing the impact of people's appreciation. coming price pressure. More importantly, the products of industrial manufactured products vary greatly. The impact of RMB appreciation on the competitiveness of export products mainly depends on the price comparison with products from related countries. Judging from the substantial price competition of Chinese products in recent years, my country's low-level industrial manufactured products have a huge price advantage compared with other countries. Even if the price increases slightly due to the appreciation of the RMB, it will not necessarily be higher than that of other countries and region, so as not to affect the export competitiveness of our country’s products to a great extent.

Thirdly, low labor costs allow export companies to withstand certain appreciation pressure. Zhejiang is a model for China's labor-intensive product production. Its international competitiveness supported by low wages is much higher than the national average. Low labor costs have become the main support for Zhejiang's products to have obvious price advantages in the world market.

According to calculations in the 2002 Trade and Development Report, among 17 important sample countries, China has the lowest unit labor wages, and wages in the United States are 50 times higher than wages in China. Low labor costs will not be completely offset by rising export prices. After the RMB appreciates, if the magnitude is not very large, labor costs will still have a clear comparative advantage. Low labor costs allow export companies to adopt price reduction strategies to alleviate the pressure caused by RMB appreciation, and exports will not be significantly reduced due to RMB appreciation.

Finally, the exchange rate is not the main factor affecting exports. The improvement of industrial labor productivity is the key to the rapid growth of exports. Historically, since 1994, the real exchange rate of the RMB has been on an appreciation trend, but China's exports have maintained a rapid growth momentum. From 1994 to 2002, the nominal exchange rate appreciation rates of the RMB against the U.S. dollar, the euro (the German mark before 2001) and the Japanese yen were 5.1%, 17.9% and 17% respectively, and the real exchange rate appreciation rates were 18.5%, 39.4% and 17% respectively. 62.9%. During this period, China's annual export growth rates to Germany, Germany and Japan were 17.3%, 11.5% and 14.1% respectively; Zhejiang's annual export growth rates to Germany, Germany and Japan were 23.9%, 20.7% and 14.7% respectively. This shows that the exchange rate is not the key to exports, but the improvement of labor productivity is the core factor. Since the 1990s, the labor productivity of China's export sector has maintained a growth rate that is 1.5 to 2 times higher than that of the United States, and Zhejiang's labor productivity is higher than the national average. As long as the rapid improvement of labor productivity is maintained, export volume will naturally continue to grow.

2. Foreign direct investment will not decline on a large scale

From 1994 to 2003, our province attracted a total of US$29.0 billion in foreign direct investment, with an average annual growth rate of 37.2%. Foreign-funded enterprises have become a catalyst for It is an important driving force for our province's economic growth and solving employment problems, and is also an important way to introduce advanced foreign production technology. After the appreciation of the RMB, foreign direct investment will not drop significantly, because there are three main reasons for foreign-funded enterprises to invest in China:

First, they are optimistic about the large market of 1.3 billion people. It is impossible to find another such huge potential market in the world. Fierce market competition has led to a large number of foreign-funded companies entering China in search of new profit growth points. Taiwan's Master Kong Group was just a little-known small company before entering the mainland market. After entering the mainland, the huge mainland market made it rapidly grow into the largest Taiwan-funded food company in China, earning it the reputation of "Chinese Noodle King".

The second is to make full use of China’s cheap labor resources. my country's labor wage level is quite low. Measured by the nominal wage level in the manufacturing industry in 1998, China's labor cost is only 1/50 of that of the United States, 1/30 of that of Japan, and even only 1/4 to 1/4 of that of developing countries such as Malaysia and the Philippines. 5. Another important factor here is the long-term intensive farming operation, which has created the excellent qualities of Chinese farmers who are particularly good at enduring hardship, as well as the dexterity of their minds and bodies.

The third is the appeal of similar cultural traditions. Among the foreign-funded enterprises in Zhejiang, Hong Kong-funded and Taiwan-funded enterprises account for about half. Mainland China, Hong Kong and Taiwan share the same language and cultural traditions, and a high sense of cultural identity is an important reason for these companies to invest in China. The slight appreciation of the RMB will not have a major impact on the introduction of this type of foreign investment.

These three leading factors for the rapid growth of foreign investment all have obvious long-term characteristics, so foreign direct investment will not be quickly reversed due to the increase in the external price level of RMB. Against the specific background of the raging SARS epidemic in 2003, our province still achieved considerable results in utilizing foreign capital to prove this point.

3. There will be no widespread unemployment

Employment is not only an economic issue, but also an important social and political issue. Many people worry that the appreciation of the RMB will seriously affect aggregate demand, causing widespread unemployment and affecting social stability. This concern is unfounded.

Exchange rate adjustment mainly affects employment through two channels. First, the appreciation of the RMB will cause changes in the relative prices of imports and exports, which will then affect exports and ultimately employment; second, the appreciation of the RMB will affect foreign direct investment. This in turn affects fixed asset investment, which in turn affects employment status. According to the previous analysis, after the appreciation of the RMB, there will be no fundamental reversal in corporate exports and foreign direct investment, and therefore there will be no significant fluctuations in employment.

In addition, China's domestic demand has been very strong since 2002. The central bank began to use open market operations to withdraw money from the beginning of 2003. After July, it adopted some monetary policies to increase the control of domestic loans. So far, domestic demand still tends to expand automatically. After the RMB appreciates, as long as domestic demand maintains steady growth, it can offset the impact of appreciation on external demand and maintain the stability of aggregate demand. As long as aggregate demand maintains steady growth, employment may fluctuate slightly after the RMB appreciates, but it is unlikely to cause widespread unemployment.

3. Six major impacts of RMB appreciation on Zhejiang

RMB appreciation is a new opportunity for our province’s economic development, which is conducive to adjusting and optimizing the industrial structure and transforming the economic growth mode. Although this exchange rate adjustment only appreciated by 2%, the change to "referring to a basket of currencies" means that the exchange rate formation mechanism has taken a solid step towards marketization.

Zhejiang has a higher degree of marketization, and market entities are more mature and rational, making it easier to grasp the price signals expressed by exchange rate changes, allocate resources reasonably and effectively, and improve the efficiency of economic development.

(1) It is conducive to better utilization of overseas resources

The appreciation of the RMB is conducive to increasing residents’ welfare. In 2003, the per capita disposable income of urban residents in our province was 13,100 yuan, and the RMB appreciation was 2%, which is equivalent to an increase in each person's purchasing power of American goods by 262 yuan. This can expand residents’ purchases of imported goods and reduce the cost of studying abroad and traveling abroad.

The appreciation of the RMB is conducive to the use of foreign resources. Constraints on resources, technology and other factors will be a long-term problem for Zhejiang’s economy. In recent years, Zhejiang's import of basic resources such as iron ore and crude oil has grown rapidly. In 2004, it increased by 325% and 140% respectively compared with 2003. The appreciation of the RMB and the reduction of import costs are good news for Zhejiang. According to Hangzhou Customs statistics, Zhejiang imported US$14.61 billion in the first half of this year. Calculated based on the appreciated RMB exchange rate, US$2.34 billion can be saved.

The appreciation of the RMB is conducive to the use of advanced foreign knowledge. As the RMB appreciates and purchasing power increases, domestic companies can increase their direct purchase of overseas patents, technologies and equipment at lower costs, and at the same time send more management and technical personnel to study abroad. Huzhou Jiuli Special Steel Co., Ltd. recently signed a contract to import a hot extrusion press that ranks ninth in the world in terms of single-machine pressure, worth 9.75 million euros. After the RMB appreciates by 2%, the company will pay 2.25 million yuan less.

(2) It is conducive to accelerating the flow of labor to the tertiary industry

After the appreciation of the RMB, it reduces the import costs of enterprises, which will create a situation of expanding the import of high-tech products such as machinery and equipment; and At the same time, for export companies, the appreciation of the RMB means a relative increase in labor costs. Therefore, there will be situations where overseas capital goods are used to replace domestic labor. That is, companies expand the import of machinery and equipment and use the high efficiency of new technologies to reduce the employment of workers. . From this perspective, RMB appreciation will cause a certain number of people to lose their jobs.

However, this process will accelerate the improvement of the overall production efficiency of the manufacturing industry and increase the wage income of manufacturing workers, thereby increasing their consumption power. This will provide opportunities for the development of the tertiary industry represented by the service industry. good opportunities. In this way, the employed people replaced by high technology will be absorbed by the tertiary industry, resulting in an accelerated transfer of labor to the tertiary industry. This will make the role of the service industry in absorbing employment more and more prominent, which is also in line with the development of developed countries. experience.

(3) Conducive to changing the mode of economic growth

First of all, RMB appreciation can accelerate the adjustment of industrial structure. After the RMB appreciates, the export of low value-added products will be suppressed and corporate profit margins will decrease. In order to survive in the competition, enterprises have to change the way they compete. On the one hand, they will pay more attention to the domestic market instead of blindly pursuing exports and becoming a workshop of multinational companies; on the other hand, they will work hard to transform the export structure and increase the demand for high value-added products. This will force companies to improve their technological level and create pressure to accelerate the transformation of the industrial structure. In addition, after the RMB appreciation, import costs are reduced, and enterprises can better utilize overseas knowledge, technology, advanced equipment, etc., reducing the cost of industrial structure adjustment.

Secondly, the appreciation of the RMB is conducive to changing the mode of economic growth. While Zhejiang's economy is developing rapidly, the pressure on the environment and resources is becoming more and more serious, almost reaching the limit of endurance. The unit energy consumption of Zhejiang's main products is more than 30% higher than that of developed countries, and the energy utilization efficiency is more than 10 percentage points lower than that of developed countries. In 2003, per capita energy consumption and per capita annual electricity consumption increased by 23% and 100% respectively compared with the end of the "Ninth Five-Year Plan". Some export products rely on high energy consumption and high pollution to survive, and are the product of foreign countries passing on environmental pressure. Appropriate appreciation of the RMB will reduce the cost of importing high-tech equipment with low energy consumption and high environmental protection, increase the number of imports, effectively reduce the waste of resources, and alleviate environmental pressure. In addition, we can also use the "survival of the fittest" effect to eliminate some export enterprises with high energy consumption and low added value of products, gradually transform the phenomenon of auctioning our precious resources to the world at a low price, and accelerate the transformation of economic growth mode.

(4) It is conducive to reducing trade frictions and improving the trade environment

Zhejiang’s exports are mainly labor-intensive industrial products lacking core technologies. These products roughly account for More than 80% of the total amount. The added value of export products is low and they mainly rely on low prices to compete in the international market. Trade frictions are inevitable. From 2002 to 2004, Zhejiang police encountered 71 cases of foreign "two anti-two guarantees" and "337 investigation", involving 2,496 companies and a total amount of US$1.5 billion, accounting for 45%, 50% and 60% of the country's total, respectively. Zhejiang has become the province subject to the most anti-dumping and safeguard measures investigations.

In the short term, the export price of products will increase after the RMB appreciates. However, since the prices of our province's export products are already very low, even if the prices are raised appropriately, the products will still be highly competitive, and it will help reduce other countries' lawsuits against China for low-price dumping of products. Some of Zhejiang's export products have a very high share in the international market. If we take advantage of this market advantage and increase product prices appropriately, we may actually increase profits.

The appreciation of the RMB has also shown the world my country's attitude towards exchange rate reform. Countries such as Europe and the United States will inevitably adjust their trade policies towards China and reduce the number of various trade frictions.

In the long term, although the RMB exchange rate adjustment only increases by 2%, it shows a signal: the RMB is returning to the real exchange rate. For enterprises, this means that they must adjust their low-price competition strategies in the future to win in terms of quality, style, function and after-sales service, improve their position in the international division of labor and value chain, increase the added value of products, and enable exports Trade is gradually integrated into the benign track of sustainable development. And this is obviously conducive to reducing trade friction.

(5) It is conducive to accelerating the process of our province's enterprises going global

Zhejiang Province has a developed private economy and abundant private capital, which has the typical characteristics of "hiding wealth among the people". The province's deposit balance reached 147.58 billion yuan in 2003, with an average annual growth rate of 27.8% since 1990. However, due to imperfect economic and financial structures, the transmission mechanism from savings to investment is blocked, and a large amount of remaining capital is looking for profit opportunities. When the stock market is sluggish, capital rushes into the real estate market crazily. The "Wenzhou Real Estate Speculation Group" active across the country is an obvious example. In this sense, our province does not lack investment funds, but only investment opportunities.

After the appreciation of the RMB, less currency can be used to purchase more foreign resources, which will stimulate enterprises to develop foreign investment and implement cross-border operations, so that they can better utilize the international market without worrying about trade barriers. sanctions. Throughout the development process of foreign multinational companies, the low-level stage is pure product export, and the advanced stage is direct investment and on-site production. If Zhejiang enterprises want to take the lead in going global, they must go through this process. RMB appreciation will accelerate the realization of this process.

(6) Some adverse effects of RMB appreciation

Zhejiang’s economy has obvious export-oriented characteristics. In 2004, Zhejiang Province’s total foreign trade amounted to US$85.23 billion, and its dependence on foreign trade reached as high as 66%. , export dependence is as high as 43%. For a major export province like Zhejiang, RMB appreciation will also have some adverse effects.

——Crack down on export companies. It has the greatest impact on low value-added products such as the textile industry. There are many small textile companies in Zhejiang with an export volume of less than 2 million US dollars. The profits of the textile industry are generally less than 10%, and the profits of these small companies are only about 3%. A one-time appreciation of 2 percentage points will have a big impact on the enterprises.

——Affects foreign direct investment. The appreciation of the RMB will reduce the value of the same amount of foreign currency converted into RMB, which will reduce the profits of foreign investors and naturally slow down investment.

——Affect employment. The export enterprises in our province are mainly labor-intensive enterprises. When the RMB appreciates and profits of export companies decline, companies are likely to pass on the losses caused by the appreciation of the RMB by lowering workers' wages and reducing the number of workers. This will have a certain impact on employment.

——Expanding the income gap. Revenues expressed in U.S. dollars increased after the yuan appreciated. But only middle- and high-income groups who can buy imported high-end products can truly enjoy the benefits of appreciation. In addition, after the appreciation of the RMB, the Shanghai and Shenzhen stock markets rose, benefiting also middle- and high-income groups with investment capabilities. The income gap will widen due to the appreciation of the RMB.

IV. Actively grasp the characteristics of the new development stage formed by the appreciation of the RMB and accelerate the transformation of the economic growth model

Whether it is Japan, South Korea, or Germany, the appreciation of the local currency will push the national economy into a new era. stage of development. The Japanese experience shows that after the local currency enters the process of appreciation, a country's economy and society will still have a period of rapid development for at least 20 years. The appreciation of the RMB also indicates that China's economy has entered a new stage of development, which has five important characteristics.

Firstly, the level of marketization will be further improved, and the market will play a greater fundamental role in resource allocation; secondly, China’s economic competitiveness will increase and its voice in the global economy will strengthen; thirdly, commodities and The low-price advantage of labor services has begun to weaken, creating pressure to promote industrial structural adjustment and transform economic growth methods; fourth, China's economy will further integrate with the global economy, at least gradually forming an internal and external economic integration pattern in terms of trade, commodity prices, etc.; fifth, floating The exchange rate system has led to increased uncertainty in the market environment, but as long as macroeconomic control is carried out flexibly and selectively, it will help activate positive factors within the economy and society and enhance the sensitivity of the rational allocation of factors

Full It is our current important historical mission to grasp some important characteristics of the new development stage formed by the appreciation of the RMB and accelerate the transformation of Zhejiang's economic growth model. As far as the government is concerned, it should take advantage of the opportunity of RMB appreciation to further accelerate market-oriented reforms and accelerate the transformation of economic growth methods. As far as enterprises are concerned, in the short term, they can use various financial means to avoid exchange rate risks, and they can also adopt methods such as passing on the burden to dealers to reduce losses from RMB appreciation. In the long term, they should turn pressure into motivation and accelerate technology Make progress, accelerate the adjustment of product structure, and enhance the core competitiveness of enterprises.

1. Accelerate market-oriented reform and seize the opportunity of exchange rate changes to optimize the resource allocation mechanism. The exchange rate is not only a policy tool but also a price.

As a price, the exchange rate should be determined by the market in a market economy; as a policy tool, adjusting the exchange rate is to affect the economic behavior of market entities. Therefore, whether changes in the exchange rate can play an effective regulatory role depends on whether the market mechanism is perfect. It depends on whether market entities can respond to exchange rate adjustments in a timely and sensitive manner. Zhejiang has a developed private economy and a high degree of marketization. At present, property rights reform should be used as a starting point to accelerate the transformation from a primary market economy to a modern market economy and improve the marketization level of resource allocation. Only when the market system is perfect, can market competition entities accurately grasp the domestic and foreign price information conveyed by exchange rates, and correctly conduct international comparisons of costs and profits, so that import and export trade can truly be based on comparative interests and maximize Improve the competitiveness of enterprises. At present, we need to accelerate the process of factor marketization, such as reducing the government's administrative intervention in the transfer of industrial land, increasing the proportion of industrial land bidding, listing, and auctioning; accelerating the pace of government reform, with a more innovative government, providing more low-cost A wide range of public products promote the good operation of the national economy and society; accelerate the improvement of integrity levels, strengthen government supervision, and maintain and optimize the market economic order.

2. Implement the import strategy and increase the use of overseas advanced knowledge and other resources. The appreciation of the RMB has brought export pressure to our province's enterprises, but it has also reduced the cost of our province's use of overseas advanced knowledge and other resources. This is a major issue for Zhejiang, which is both restricted by natural mineral resources and constrained by a lack of knowledge. strategic opportunities. Therefore, we must proceed from the strategic perspective of "leveraging" development and opening up to promote development. We must study and implement import strategies just like we focus on exports, accelerate the introduction of overseas advanced knowledge, and actively utilize overseas mineral resources. It is necessary to systematically study and increase study abroad training, introduction of patents and technical equipment, procurement of advanced commodities, purchase of energy raw materials, etc. By using overseas advanced knowledge and purchasing mineral resources, we can optimize the import structure, make good use of Zhejiang's huge foreign exchange, accelerate the improvement of Zhejiang's economic and social knowledge level, alleviate Zhejiang's resource constraints, get out of the path lock of the industrial structure, and transform the economic growth mode.

3. Strengthen the construction of intermediary organizations such as industry associations and pass on rising cost factors to dealers. Transferring costs to overseas dealers is an important strategy for exporters to ease the cost pressure of RMB appreciation. However, individual enterprises are weak and need to be led by non-governmental industry organizations under the guidance of the government to enhance their ability to negotiate prices with overseas dealers. Industry associations must also seize this opportunity and give full play to their role. In fact, the export products of some enterprises in our province have a high share in the international market. We have strong negotiating power on price and can ask our customers to share the profit losses caused by the appreciation of the RMB. For example, in the export contract signed between Shaoxing Haona Textile Trading Co., Ltd. and a foreign businessman in Saudi Arabia, the unit price of 1 meter (1.5 meters long, 1 meter wide) "Jetta chemical fiber fabric" increased by 3 cents, or 4.3%, compared with before. This way, we can effectively share the rising cost pressure brought about by RMB appreciation with our dealers.

4. Enhance core competitiveness and transform the foreign trade export structure. It is impossible for enterprises to rely on the protection of external policies such as exchange rates and interest rates for long-term development. We must rely on scientific and technological progress and improvement of labor productivity to enhance the intrinsic competitiveness of products and achieve the transformation and development of enterprises. Taking advantage of the opportunity of RMB appreciation, enterprises should reasonably arrange their import plans, increase the import of advanced technologies and high-tech products, and improve their technological level. Enhance the corporate brand connotation and create the brand's international advantages. Carry out resource integration and product structure adjustment, implement diversification strategies, improve product quality and grade, adjust product structure, increase product added value, and realize product output to brand output and capital output.

5. Strengthen long-term research on the RMB exchange rate. The adjustment of the RMB exchange rate will have a multifaceted impact on Zhejiang's economy. Our institute will conduct further in-depth investigation and research in the future. It is also hoped that relevant departments will attach great importance to this issue, organize scientific research forces across the province, conduct regular discussions, and conduct in-depth research on Zhejiang’s economic response to the trend of RMB appreciation.