Yuan Appreciation Impacts Textiles Adjust font size:
Quote When powerful forces collide head-on at the intersection of politics and economics, the crash is bound to be loud and unsettling. The Bush administration is publicly pressuring China to allow the yuan to rise against the dollar to stave off protectionist legislation in the U.
Some lawmakers, responding to concerns on the part of manufacturers and labor unions, assert that cheap Chinese exports — made even cheaper by a yuan whose exchange rate, they say, is too low in relation to the dollar — give Chinese firms unfair advantage over American companies and is a major contributor to the U.
In response, Chinese officials, who have kept the yuan fixed at 8. But the United States, by trying to force the issue in such a vociferous, public manner, is unnecessarily antagonizing the Chinese and possibly delaying the revaluation, according to these experts.
They say that the application of pressure by the United States is a political move designed to assuage interests adversely affected by competition from China. They add that revaluing the yuan will not revitalize industries that have been battered by a longstanding and irreversible trend of certain jobs moving to China, where labor and production costs are cheap.
The more pressure we put on them, the more they are going to balk. Hanke, a professor of applied economics at Johns Hopkins University and a longtime foreign exchange and commodities trader, calls the U. Determining how much the yuan should be allowed to appreciate against the greenback is tricky business for Beijing: Marston says China essentially has two options: But whatever action they decide to take, Chinese officials should make a bold enough move to avert calls for another revaluation.
They are, however, unlikely to be sufficiently bold. Piecemeal attempts would require additional changes in the future and increase pressure. They should repeg the yuan against the dollar or, preferably, against a market basket. That clearly will relieve some of the pressure but could lead to further calls for additional moves.
The advantage of a basket is that if there were a movement by the euro against the dollar, for example, China could adjust to that movement. If the euro were to rise against the dollar, it would force an appreciation of the yuan against the dollar and a depreciation of the yuan against the euro.
Noting that the European Union also has begun to put pressure on the Chinese regarding the yuan — in a dispute centered on Chinese textile exports to Europe — Marston says America should ease up on China. We ought to use a little less rhetoric and a little less action in the Senate and try to use backdoor diplomacy.The establishment of textile industries gives rise to expectations of growth and development while providing employment to thousands of people.
The problems are that, government and the companies do not foresee the environmental impact and find no solutions to prevent pollution caused by textile industry's wastage (Smith ).
Jan 16, · The Impact of Yuan Revaluation On July 21, , China abandoned the year peg of its currency, Yuan, at RMB to the dollar. From now on, the Yuan will be linked to a basket of currency (write currency and number of currency), the central parity of Yuan is decided to set at the end of each day.
Aug 01, · Since they assume revaluation would have no impact on the value of U.S. Imports from China, this translates into a $ billion improvement in the trade balance.
Yuan appreciation impacts textiles By Tang Fuchun (ashio-midori.com) Updated: Zhang Hongzhong, vice general manager of Beijing Topnew Import & Export Co., Ltd., has been keeping a close watch on the yuan's international exchange rates. For the yuan revaluation to have any impact on exports, Mr Mahajan, said the Chinese currency must appreciate by per cent.
"In any case India and China export to different markets. China is also far ahead in its share of exports to the world markets," he said.
Under normal circumstances, the devaluation of the yuan would have a huge, negative impact on the Brazilian economy.