No matter in school or in society, everyone has written a paper. Thesis is a comprehensive style, through which we can directly see a person's comprehensive ability and professional foundation. Do you know how to write a good paper? The following is my carefully organized paper on the pros and cons of RMB appreciation for your reference, hoping to help friends in need.

Abstract: After the financial crisis, China took the lead in getting out of the trough. The United States and other countries have once again begun to put pressure on China to force the RMB to appreciate. This paper analyzes the advantages and disadvantages of RMB appreciation on China, and holds that the disadvantages of RMB appreciation outweigh the advantages in the short term, and the advantages outweigh the disadvantages in the long term. Therefore, China should resist the pressure in the short term and keep the RMB exchange rate stable. In the long term, it should speed up the reform of the exchange rate formation mechanism and implement a flexible exchange rate.

Keywords: RMB appreciation flexible exchange rate system

With China's economy recovering first in the global crisis, western economies led by the United States began to put pressure on RMB appreciation from the beginning of 20 10. The report on international economic policy and exchange rate policy released by the US Treasury three months later, although China was not listed as a currency manipulator, finally insisted that the RMB was undervalued. Whether the RMB should really be "led by the nose" by the United States and other western countries or should insist on maintaining exchange rate stability. RMB appreciation is a double-edged sword for China's economy, which has both advantages and disadvantages. If the RMB appreciates sharply in a short period of time, the disadvantages outweigh the advantages.

First, the favorable impact of RMB appreciation

The favorable impact of RMB exchange rate appreciation is mainly manifested in five aspects:

The first is to stimulate the increase of imports. With the appreciation of RMB exchange rate, the prices of foreign consumer goods and means of production are cheaper than before, which is conducive to reducing import costs. At the same time, the rise of exchange rate will restrain exports, which will promote the economic restructuring of China in the long run.

Second, it is conducive to improving the environment for attracting foreign investment. The appreciation of RMB exchange rate can increase the profits of foreign-funded enterprises that have invested in China, thus enhancing investors' confidence and prompting them to further invest or reinvest; The appreciation of RMB exchange rate will attract a large amount of foreign investment into China's capital market.

Third, it is conducive to improving the value and international reputation of RMB, expanding the scope of RMB settlement, and paving the way for RMB internationalization.

Fourth, it is conducive to reducing trade frictions. In recent years, the frequent anti-dumping lawsuits and other trade disputes in China have increasingly focused on the low pricing of RMB exchange rate, which makes RMB appreciation the key to reduce trade friction.

Fifth, it is beneficial for Chinese enterprises to invest abroad, go global and increase China's capital output and investment strength.

Second, the adverse effects of RMB exchange rate appreciation

Especially in the current situation, the negative effect of RMB exchange rate appreciation on China's economy is more prominent.

The first is to curb export growth. The appreciation of RMB exchange rate will do great harm to the price competitiveness of a large number of labor-intensive export products in the international market, especially in the post-financial crisis era, which is not conducive to economic recovery. At the same time, China is an export-oriented economy, which has a great influence on economic growth.

Second, it affects the stability of financial markets. In the case that China's financial supervision system needs to be further improved and the development of financial market is relatively lagging behind, once the RMB appreciates sharply, it will trigger the impact of "hot money" on the financial system. The profit-seeking behavior of a large amount of short-term capital flowing into the capital market through various channels will increase the bubbles in China's housing market and stock market and adversely affect the sustained and healthy development of China's economy.

The third is to affect the effectiveness of monetary policy. In order to maintain the basic stability of the RMB exchange rate, the central bank is forced to buy a large amount of foreign exchange in the foreign exchange market, which makes the use of funds inefficient and affects the effectiveness of monetary policy.

The fourth is to increase employment pressure. At present, the employment opportunities provided by China are mainly export enterprises. The appreciation of RMB will inhibit or crack down on exports, and even lead to bankruptcy of export enterprises, which will eventually lead to employment difficulties and affect social stability.

The fifth is to shrink China's huge foreign exchange reserves.

Third, the short-term disadvantages of RMB appreciation outweigh the advantages, and the long-term advantages outweigh the disadvantages.

The advantages and disadvantages of RMB appreciation should be weighed from both short-term and long-term perspectives.

In the short term, RMB appreciation will definitely do more harm than good. At present, maintaining the stability of RMB exchange rate is a necessary means to ensure a certain economic growth rate in China. China's economic growth is largely driven by exports, and it takes a process to expand domestic demand. If exports are cut down rashly, a large number of export-oriented enterprises will go bankrupt due to insufficient affordability, which will seriously affect China's economic recovery and growth. We must realize that external demand will remain an important driving force for China's rapid economic growth until China's domestic demand structure is obviously improved and its economic development level reaches a certain level. This reform of the exchange rate formation mechanism will make the exchange rate more flexible and make it impossible for the RMB to appreciate significantly in the short term.

In the long run, if the status quo is maintained, maintaining the exchange rate will inevitably bring some huge negative effects. For example, the central bank's ability to regulate monetary policy has been greatly damaged; Leading to increased inflationary pressure in China; It leads to relative price distortion and aggravates the degree of economic imbalance.

Generally speaking, in the long run, it is very important for China to maintain a more flexible exchange rate system, and RMB exchange rate management should advocate three characteristics: gradual, endogenous and controllable. China's flexible exchange rate system is not only conducive to the adjustment of global economic structure, but also of far-reaching significance to China's own economic structure adjustment and long-term healthy development. In the long run, the slight appreciation and flexible floating of RMB in the moderate economic range will do more harm than good. But in the short term, it is necessary to keep the RMB exchange rate stable. The RMB exchange rate should fluctuate with more consideration of domestic economic factors and situation, and should not be subject to pressure from other countries such as the United States to make the RMB appreciate sharply. The United States forced the appreciation of the renminbi more for its own interests and promoted its sustained economic recovery. The main reason for the huge current account deficit of the United States is its own national conditions, and it is unreasonable to blame it on China's undervalued RMB exchange rate. Therefore, before the relevant reforms in China are completed, the sharp appreciation of the nominal exchange rate in the short term will not only help to promote the adjustment and upgrading of China's economic structure, but may bring many potential risks that cannot be dealt with. China should resist external pressure, speed up the reform of exchange rate system, build a more flexible exchange rate formation mechanism as soon as possible, and control the appreciation of RMB.

References:

[1] Shi Cheng: Is RMB exchange rate appreciation "reasonable" [J] Shangxi 20 10 04

[2] Chen Yongchang: advantages and disadvantages analysis and trend forecast of RMB appreciation [Z] Phoenix.

[3] He Jun: Before the global economic recovery, China should adhere to the current RMB exchange rate policy [J] Economic Research Reference No.70, 2009.

[4] Cao Tong: United with Lian Heng, take the initiative to attack, the new thinking of RMB exchange rate war [J] Global Finance 20 10 04.

[5] Du. U.S. Treasury Department: China is not a currency manipulator, and the RMB is still undervalued [N] Oriental Morning Post 201July 10.

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