According to the China Glass Network, in response to the domestic and international economic and financial situation as well as China's balance of payments, the People's Bank of China has decided to further advance the reform of the RMB exchange rate mechanism and increase its flexibility. This move has had a positive impact both domestically and internationally. Experts and scholars interviewed by this reporter highlighted that enhancing the RMB's exchange rate flexibility can help drive economic restructuring and promote more coordinated, sustainable development.
During the global financial crisis, China appropriately limited the RMB’s volatility to cope with external shocks. This approach aligned with China’s national interests and contributed to the stability and recovery of its economy. Li Daokui, a member of the Monetary Policy Committee at the People's Bank of China and a professor at Tsinghua University, stated that the current exchange rate reform is a well-timed decision made from a broader perspective. With China's economy showing strong recovery and a focus on transforming its development model, now is an ideal time to push forward with exchange rate reforms, especially as the global economy continues to recover but is unlikely to experience a double bottom.
It is worth noting that during the worst phases of the financial crisis, many countries saw their currencies depreciate against the U.S. dollar, while the RMB remained relatively stable. This stability was a significant contribution to global economic recovery. Li Daokui emphasized that China's exchange rate policy during the crisis has been widely recognized by major global economies.
Ding Zhijie, a professor at the University of International Business and Economics, pointed out that the RMB's relative stability played a crucial role in mitigating the effects of the financial crisis. As the domestic and international economic landscape continues to evolve, the conditions for further exchange rate reform have now been established.
In today's global monetary system, where major currencies operate under floating exchange rate regimes, export companies must adapt to fluctuations in currency values. Li Daokui believes that China's trade balance is becoming more balanced. In 2009, the ratio of China's current account surplus to GDP dropped significantly, and this trend has continued this year, bringing the balance of payments closer to equilibrium. There is no foundation for large-scale exchange rate fluctuations, which means the impact on export firms will not be too severe in the short term. However, in the long run, companies need to proactively adjust, focus on improving product structure, enhance technical management, and develop competitive products in the global market.
Ba Shusong, deputy director of the Financial Research Institute at the State Council's Development Research Center, noted that the global economy is gradually recovering, and China's economic recovery is becoming more solid. With the stabilization of economic operations, export enterprises have greater capacity for expansion. For businesses, demand is key, and exchange rates are just one of many factors. It should not be underestimated how well companies can adapt. In fact, when the exchange rate reform was introduced in 2005, many feared it would severely affect export companies. However, after the reform, these companies adjusted themselves, improved management, and continued to grow successfully.
Zhao Xijun, a professor at the School of Finance at Renmin University of China, believes that enterprises should actively respond to the impact of exchange rate fluctuations in line with the goals of economic restructuring. First, they should adjust their production capacity and avoid building high-energy, low-value product lines. Second, they should focus on industries encouraged by the state, such as high-tech sectors. Third, they should not limit themselves to domestic markets or resources anymore, as exchange rate flexibility affects all aspects of raw materials, products, and costs. Finally, they must manage the risks associated with exchange rate changes, as fluctuations can go both ways. For companies engaged in cross-border trade, whether exporting or importing, it is essential to anticipate the impact of exchange rate movements on costs and plan accordingly.
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