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Sign up with Google Sign up with FacebookQ: Do you think the continued appreciation of RMB is good or bad for China's economy in general?
The government is keeping the value of the RMB low for a reason. Low value is what's keeping the economic growth so high. Is it good for the people? No. All that money goes to the few people who own those major businesses and the government. If the RMB were at its true value, companies wouldn't be buying their cheap labor from China, it would be too expensive. They'd lose a lot of profit.
if the value of the rmb continues to go up against the US dollar that will be bad. china is too dependent on exports, that means the cost to manufacture goods must remain low.
as far as inflation at home that is very bad the one great thing about china is the low cost of living, if people have to spend more to feed themselves and clothe themselves then you will see growing unrest.
in america, if people are upset with the govt they switch to another party. the key benefit to a 2 party system. but china is a one party system, if the people get upset they will want a new government (Syr.O.ia, Ly.O.bia.. Eyg.O.pt etc)
Erm, most countries, at this stage of their development, start investing in higher-end goods. Mo money=higher standards, cheap labour stops being cheap, all that. Time to reinvest the money you made filling dollar stores.
I remember when Japanese everything was synonymous with crap. "Cheap Japanese knock-off" was on par with today's "cheap Chinese knock-off" (almost identical box-art and same-name-except-one-letter included), but Japan started to shift into higher-end goods. finance, etc. Yes, Japan's economy has been somewhat unstable but have you ever been there? Compare the standard of living even in the rough years with an average Chinese city. Same happened later with Taiwan and (now) South Korea, and on a smaller, less noticeable scale with many European countries. Hell, the anglophone countries, Germany, and France went through that before living memory, but all of that is a historian's footnote now.
Of course, the question is, can China change itself enough to hack it? China's closed society, coupled with a healthy dose of arrogance, might retard the kind of rapid social and economic readjustments needed for a country to economically and socially restructure and adapt as most countries in the industrial-to-service phase have had to do.
There's a Chinese conviction that China is poor only because other countries, especially America, "harm" it in a serious but rarely-specific way. Rather than looking at the evidence (thirty-three developed countries having gone through similar stages of developments, albeit at different rates), they seem to have a massive sense of entitlement (eg. "everything is Obama's fault, he should be throwing money at us for getting pissed on Baijiu at work, halfway around the world" sounds perfectly reasonable to the Chinese), a stubborn insistence that there is no room for improvement, and a "it's not my fault" attitude towards everything. That's not the attitude that breeds wealth.
The next 20-30 years will be very interesting to watch.
China is just letting it appreciate enough to shut up the US and WTO. Guarantee you it won't rise higher than maybe 5RMB per USD. China's exchange rate is favorable to foreign investment but once it becomes not as profitable as before, then all these companies will move their factories back to Mexico, Thailand and wherever else they used to be.
Unfortunately and due to heavy investment's in the U.S. economy, China has a firm and dominant hold over the U.S.A. which helps them to keep the Yuan low against the dollar. This favors China since they trade huge quantities of goods with the U.S. It is unfavorable for the U.S. who unfortunately trade on unfair grounds. This will continue to keep the Yuan down but will deter extreme trading activity with Europe. If such a thing happened the Yuan would forcibly rise due to pressure from Europe. Chinese investments in the U.S., in the short term may seem generous, but a look at the larger picture shows they are taking full advantage of the situation. What seemed like help is selfishness and lack of respect and nothing more than a huge shackle that will harm the U.S. more than help in the long term. China only cares about itself and I hope that when in need the world rapes them with the same philosophy they have shown.