BIZCHINA / News |
Appreciation of RMB a double-edged sword(Xinhua)Updated: 2006-12-06 14:40 It is no longer simply economists who are discussing the strength of the Renminbi (RMB) yuan. As the yuan increases in value, affecting people's lives, its vigour has become a matter of daily conversation among Chinese citizens. Tian Yu, a young Beijing-based English teacher who is going on a business trip to the United States next week, has been following the fluctuations in the yuan's value closely. "Guess I will find cosmetics there even cheaper this time," she said with a smile. The value of the yuan against the U.S. dollar hit a new high Wednesday, with a central parity rate of 7.8226 yuan to one dollar. The appreciation followed previous records that broke the 7.87 mark, 7.86 mark, 7.85 mark, 7.84 mark in November and 7.83 mark two days ago. The exchange rate stayed at around 8.28 yuan per U.S. dollar for a considerable period prior to China's reform of the exchange rate system in July last year, when the government began to allow the yuan to float against the U.S. dollar within a daily 0.3 percent band from the official central parity rate. "A stronger RMB is good news for those planning overseas travel, study, investment and large-scale company procurement," said Dr. Mao Danping with Zhongdajunrong Investment and Consulting Company. "But it is a double-edged sword," Mao was quoted as saying by Wednesday's Internet edition of the Guangzhou Daily. The higher value of the yuan will further push up soaring Chinese housing prices, he said. People who have invested in the property market would benefit, but those who have not been able to buy an apartment would be driven even further from their housing dream, he said. The RMB appreciation will make Chinese exports more expensive and therefore reduce export volume, according to Mao. Some export-driven small and medium companies may not be able to survive and have to lay off employees. (For more biz stories, please visit Industry Updates) |
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