the RMB appreciation

ReportontheRMBappreciation（GinnyXue0702）OwainJames1BusinessReportontheRMBAppreciationClass:English0702EnglishName:GinnyChineseName:XueRongrongStudentNumber:20070801122WordCount:3375ReportontheRMBappreciation（GinnyXue0702）OwainJames2CONTENTS:SUMMARY--------------------------------------3INTRODUCTION-------------------------------4MAINFINDINGS--------------------------------5CONCLUSION---------------------------------17RECOMMENDATION-----------------------18REFERINGS------------------------------------19APPENDIXES----------------------------------20ReportontheRMBappreciation（GinnyXue0702）OwainJames3SUMMARY:Recently,theforeigncountriescontinuedtopressureChinatorevaluateRMBexchangerate.TheChinesegovernmenthasrepeatedlyreiteratedthatChina'sexchangeratereformisprimarilyatimingissue,andnowitisprematurefortheRMBappreciation.Giventhesweepingvolatilityofexchangeratesandtherepercussionsforrealeconomies,itisodd,therefore,thatcentralbanksdonotincludecurrenciesontheirpolicymakingdashboards.NowondertheChinesearethenconfusedwhensomeonefromtheTreasuryofficefliesacrossthePacificOceantotalkcurrencies.Itistimeformonetarypolicymakerstostarttalkingcurrenciestoo.Inthispaper,Firstly,IhaveanalyzedtheRMBappreciationinthepolitical,economic,social,technological,legalandenvironmentalspheres.IftheRMBisappreciated,theinternationalrelationsandthestatusofChina,theimports,theforeigninvestment,thesystemoflaw,thecleanproductionandthelow-carbonproduction,andthebuildingofanewsocialistcountrysidewillbeimprovedalot.Besides,italsodogoodtotherestructureindustryinChinaandreducingtheexternaldebtservicepressures.Inaddition,itwillbecheapertostudyabroad,doresearchandvisitabroadtocommunicatewithdifferentcountries.However,theRMBappreciationalsobringsomenegativefactors,suchastheinternationalspeculationinRMB,theimpactontheChineserealestatemarket,theReportontheRMBappreciation（GinnyXue0702）OwainJames4instabilityoffinancialmarkets,theineffectivenessofmonetarypolicy,theexportsplummeting,theemploymentpressureandsoon.Secondly,I’veevaluatedtheRMBappreciationinstrength,weakness,opportunityandthreats.AfterthatIhavegiventheconclusionthattheRMBappreciationisadouble-edgedswordandweshouldgrasptheopportunitytointegrateourselvesintotheworlddivisionbetter.Intheendoftheend,IputforwardcorrespondingcountermeasuresaccordingtotherateappreciationonChina'seconomyandexplainthereasonsaswell.INTRODUCTION:Sincethereformandopening-uptheChineseeconomyhasmaintainedalong-termstablegrowth,soundmacro-economicsituationandthestrongexportcapacityareexpectedtomakethemarketexpectationsoftheRMBappreciationincreasedsubstantially.Thetwolargesteconomies,theUSandChina,whichtogetheraccountforonethirdofglobaloutputin2010,havebeenthefocusofattentionbecauseofthespeculationaboutifandwhenChinamightrevaluetheexchangerateoftheRMB,whichiscurrentlypeggedtothedollar.(Referring1)BeijinghasdebatedwithWashingtonoverwhetheritintentionallyundervaluestheRMBforalongtime.AndthespeculationReportontheRMBappreciation（GinnyXue0702）OwainJames5grewfollowingaperceivedeasinginSino-USrelationsafterWashingtonbackedawayfromnamingChinaasacurrencymanipulator.TimGeithner,USTreasurysecretary,saidlateonTuesdaythatitwas“China'schoice”whethertorevaluetheRMB.Basedonthecurrentinternationalsituation,IwillanalyzeandevaluatetheRMBappreciationbyusingtwokindsofmethods,whicharePESTLEandSWOT.Besides,Iwillsumuptheconclusionandputforwardsomerecommendationsattheendofthereport.MAINFINDINGS:1.PESTLEAnalysis:11..11PPoolliittiiccaall::1.1.1TheappreciationofRMBwilldogoodtotheinternationalrelationsofChina.Forexample,thenewssaidthatthespeculationgrewfollowingaperceivedeasinginSino-USrelationsafterWashingtonbackedawayfromnamingChinaasacurrencymanipulator.(Referring2)IftheRMBisappreciated,wewillseeadeepeningoftheSino-USrelationship.1.1.2TheappreciationofRMBcanenhanceChina’sstatusintheworld.AlthoughWashingtonbackedawayfromnamingChinaasacurrencymanipulator,manyforeigncountriesthinkitistrue.InReportontheRMBappreciation（GinnyXue0702）OwainJames6ordertodissipatetheexistingmisunderstandingsandsetupanimageofagreatresponsiblepower,ChinacanappreciatetheRMB.11..22EEccoonnoommiiccss::1.2.1TheexpectationoftheappreciationofRMBmayattractinternationalspeculativecapitalforspeculationinRMB.BecausethehigherpositiontheRMBAppreciateacutely,themorespeculativeprofititwillbe.(Referring3)1.2.2ThedurativeappreciationofRMBmaydrivethedurativeriseofthehouseprice.BecauseitmayattractinternationalspeculativecapitaltoflowintoChineserealestatemarketandtherangeandpaceofRMBappreciationwillinfluencetheextentofinternationalcapital’simpactontheChineserealestatemarket.(Referring4)1.2.3TheRMBappreciationwillaffectthestabilityoffinancialmarkets.Mostofthefundsinthemarketaretheinternationalhotmoney,thecharactersofwhicharelargescale,instabilityandstrongtendencytoprofits,areoneofthepotentialfactorsaffectingthestabilityoffinancialmarkets.1.2.4TheRMBappreciationswillinfluenttheeffectivenessofmonetarypolicy.AstheappreciationoftheRMBexchangefacespressuretomaintainthebasicstabilityofRMBexchangerates,thecen