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Exchange rate undervaluation

exchange cashbackforexcalculatorOnline undervaluation (ExchangeRateUndervalued) What cashbackforexprofitcalculator exchange rate undervaluation Exchange rate undervaluation refers to the undervaluation of the local currency, consciously depreciate the national currency aga cashbackforexpipcalculatorst foreign currencies A countrys currency depreciation abroad is bound to make the countrys import cashback forex calculator Online export commodity prices change, the price of imported goods expressed in the national currency to increase, the price of exports expressed in foreign currencies decreased Therefore, the The economic effect is similar to the imposition of a corresponding tariff on imported products, which plays a role in limiting imports. In the case where a countrys import demand elasticity is large and the supply elasticity of foreign exports is small, the exchange rate undervaluation is beneficial to a countrys foreign exchange balance, and also plays a role in protecting the development of its national industry. It restricts the import of products that need to be restricted (such as high-end consumer goods and other final products), but also restricts the urgent import of technical equipment and raw materials, hindering the development of the national economy The undervaluation of the exchange rate will also form an excessive protection of national industry, so that national products lose the international competition to reduce costs and improve quality stimulus if certain products (such as technical equipment, raw materials, etc.) of the country If the import of certain products (such as technical equipment, raw materials, etc.) is rigid, it will raise the production costs of enterprises and push up prices, which will not only lead to a decline in the international competitiveness of national enterprises and their products, but also induce inflation in the country In order to ensure the necessary imports, while adopting the policy of exchange rate undervaluation, import subsidies can be selectively implemented for certain products to ensure the import exchange rate of important products necessary for the development of the national economy and peoples lives The impact of underestimation on the industrial structure In an open economic pattern, the exchange rate level has a huge impact on the industrial structure of a country, obviously, in the state of exchange rate underestimation, the long-term adoption of the fixed exchange rate system will inevitably lead to the stimulation of trade exports, so that a large number of high-quality resources in China to the export-oriented economic sectors, while the primary industry, high-tech industries and service industries, which need to be integrated and transformed resources, are in a relatively The lack of resources has widened the gap between sectors, urban and rural areas and regions. l. Exchange rate underestimation has led to a serious misallocation of domestic resources. cashback forex import and export industries have developed rapidly in recent years, and the pulling effect of exports on Chinas economic growth was particularly prominent in the 1990s. l The contribution of foreign trade to Chinas economic growth averaged only O.5% in the 1980s, but reached 7.5% in the 1990s. However, it is worth noting that Chinas export products are mainly labor-intensive products, and 7O.3% of Chinas exports to the United States, the European Union and Japan are labor-intensive products, including garments, toys, sporting goods, etc. Driven by the profit-maximizing nature of capital, those enterprises engaged in foreign trade activities began to expand their production scale, while those non-exporting enterprises also began to adjust their product mix to Due to the high domestic savings rate and natural advantages in labor supply, more and more multinational companies chose China as their processing and export base, making exports maintain a high average annual growth rate of 15%, and foreign trade became a strong engine driving Chinas economic development in the 1990s. However, from the perspective of the whole society, as a country with very scarce resources per capita, the excessive encouragement of low-level foreign trade exports has led to excessive consumption and export of resources. This is a fundamental reason for the surplus of talents and capital in some areas of China, and the extreme lack of talents and capital in other areas, as well as an important reason for the widening gap in economic development between the coastal areas and the central and western parts of China, the tradable goods production sector and the trade sector and the non-trade sector. In the long run, high-quality resources are occupied, which is not conducive to high-tech industries to absorb resources for long-term development, making Chinas already existing dual economic structure more solidified. Some experts point out that Chinas industrial restructuring can learn from the "wild goose model" of industrial restructuring implemented by Japan in Asia in the 1990s, which is to transfer sunset industries to other Asian industries at the lower end of the industrial chain. China, with its vast territory and diversified industrial structure, can form such a development model in its own country, that is, the eastern region, as the leading goose, needs to transfer the mature industries to the central and western regions for production, while concentrating resources in the east for high-end industrial development. Industrial development for such an industrial restructuring requires simultaneous adjustment of Chinas exchange rate policy and economic policy, so that high-quality economic resources are concentrated on high-tech industries, while export manufacturing industries are transferred to the central and western regions 2. Exchange rate undervaluation is not conducive to expanding domestic demand Although exchange rate undervaluation can stimulate the growth of trade exports, it also makes Chinas economy form a stronger dependence on the external economy, and this dependence in Chinas accession to the WTO and the gradual opening of the financial market will be more obvious after the relevant information shows that in 2001, Chinas total imports and exports reached 509.77 billion U.S. dollars, foreign trade dependence reached 44%, respectively, is 4.4 times and 1.47 times of 1990, even higher than the United States, Japan and other developed countries with a higher degree of openness according to the General Administration of Customs issued in 2004 Chinas foreign trade import and export The situation, Chinas imports and exports in 2004 up to 115.47 billion U.S. dollars, which is equivalent to 2-3 times the size of the annual trade in 2001 Chinas exports are generally low value-added products, in order to compete for external markets, exporters are usually in the foreign market price war excessive price suppression, not only a waste of national resources and interests, but also brings the export of competitive countries and deficit countries According to statistics, in 2003 alone, 71% of Chinas export enterprises, 39% of exports were restricted by foreign technical barriers, losses of about l7 billion U.S. dollars, of which 90% of food and livestock exports were damaged, resulting in losses of about 9 billion U.S. dollars, light industry, mechanical and electrical products in the "WTO" after the Technical barriers to increase restrictions, losses of about 4 billion U.S. dollars and 2 billion U.S. dollars in my technical barriers to restrict the countries, Europe, Japan, the United States, the three major economies accounted for a total of 95%, respectively, 41%, 30% and 24% in the past 20 years, Chinas goods by a number of international organizations and countries nearly 400 dumping charges, anti-dumping cases against China has caused losses to China nearly nearly However, in such an international economic environment, we still have to insist on an undervalued exchange rate policy and preferential policies such as export subsidies to encourage trade exports in order to obtain the support of exports to GDP, which is more than worth the loss for the overall interests of China A proper adjustment of the exchange rate policy can not only find a bigger market for the increasingly competitive export enterprises, but also make the momentum of economic development This will have a certain impact on Chinas industrial restructuring and sustainable economic development. The economic development of any country is inseparable from the expansion of internal demand, and China has entered a six-year-long period of economic contraction since the "soft landing" in 1997. Most of the products produced by the export-oriented economic sectors in China are concentrated in light industry, electromechanics, electrical appliances, textiles, garments, toys and other industries, and the demand for these industries in the eastern part of China has basically reached saturation, and the foreign market is also tending to be saturated, further production is not conducive to increasing industry profits and boosting demand; on the contrary, the central and western regions have an effective demand for goods from these industries. There is an effective demand for goods in these industries in the central and western regions, and if the cross-regional transfer of industries can be realized smoothly, it can increase local income on the one hand, and develop a huge market on the other hand 3. Exchange rate undervaluation affects the adjustment and upgrading of domestic industrial structure For a country with an externally-oriented economic policy, changes in the exchange rate system arrangement will more or less change the pattern of distribution of social interests In recent years, under the strong trend of foreign trade exports In order to stabilize the value of the currency, it is necessary to put a large amount of currency into the foreign exchange market, which makes the central bank tighten the money and compress the loans of commercial banks for offsetting operations, with the result that the losses brought by the outward-oriented sector of the economy are transferred to the inward-oriented sector. The "distributive effect" of this single-dollar pegging system has resulted in a redistribution of economic resources, so that foreign trade enterprises and developed regions of the export-oriented economy are in an advantageous position relative to inward-oriented enterprises and regions. Although the traditional export sector has partially solved the employment problem in China to a certain extent for a certain period of time, the development of export manufacturing enterprises has made it difficult to further solve the employment problem in Chinas labor market today. The original export-oriented export processing industry can no longer solve more employment; however, on the other hand, there is a lack of highly educated talents and waste of both phenomena, which is very much in need of the right industrial policy to guide the adjustment to speed up Chinas industrial restructuring, vigorously develop high-tech industries and reform traditional manufacturing enterprises, which is the fundamental method to solve Chinas employment problems It is worth stating that If the country can make the high-tech industries that need to get rapid development take the path of export-oriented development, it will bring the rational reallocation of resources, and the inclined policies will act on these industries, thus driving their rapid development The export-oriented development of high-tech industries is to win the market with high-quality products and services, and it does not need the exchange rate to deviate excessively from the equilibrium level to get price advantages for products in the international market

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