RMB settlement is a threshold that textile trade needs to overcome
First of all, if the settlement is in RMB, what about the export tax rebate? Second, what should my customers do if they don’t have RMB deposits? Third, if the settlement is based on the exchange rate of RMB against the US dollar on the day, it will not be much different from the current foreign trade system, and it will be difficult for us to avoid the risk of exchange rate fluctuations.
The current financial policy is obviously unable to use RMB as a means of trade settlement without changing its non-convertible nature under the capital account. Only with supporting policies can our company operate in detail. At a time when textile companies are generally experiencing a cold winter in exports, the news of RMB settlement pilots for goods trade between Guangdong and the Yangtze River Delta region and China’s Hong Kong and Macao regions, Guangxi and Yunnan and ASEAN has aroused widespread concern among entrepreneurs.
In fact, since the 1990s, the use of RMB as a means of trade settlement has been widely used in border trade in Heilongjiang, Xinjiang, Guangxi, Yunnan and other places. As early as that time, some people in the academic community were discussing the ways and conditions for the development of the RMB into an international currency based on this phenomenon. The positive view at that time was that after 10 to 15 years of hard work, free settlement in RMB would be gradually realized.
The 1997 Southeast Asian financial crisis made the issue of financial system reform the core of practice, and the topic of RMB temporarily retreated from the focus.
What textile companies are concerned about today is not the border trade issue, but whether the textile trade with Hong Kong, Macao and Taiwan, Southeast Asian countries, South Korea, and Japan can be settled in RMB.
“This thing sounds good, but it is definitely not simple to implement.” Zhen Zhongming, chairman of Yixing Leqi Textile Printing and Dyeing Co., Ltd., believes, “First of all, if the settlement is in RMB, what about the export tax rebate? Second, What should my customers do if they don’t have RMB deposits? Third, if settlement is carried out based on the exchange rate of RMB against the US dollar on the day, it is not much different from the current foreign trade system, and it is difficult for us to avoid the risk of exchange rate fluctuations.”
” Of course, we very much hope that export orders can be settled in RMB, which can fundamentally avoid the risks caused by exchange rate fluctuations. However, exchange rate risks exist objectively. If settled in RMB, the exchange rate risks may be completely borne by international buyers. So , although we are very much looking forward to it, it is definitely impossible to implement it in a short period of time.” Lin Zhongyi, chairman of Jiangsu Changzhou Yueye Textile Co., Ltd., believes.
“The current financial policy is obviously unable to use RMB as a means of trade settlement without changing its non-convertible nature under the capital account.” Shan Jianming, chairman of Zhejiang Meizinda Textile Group, said, “This matter To be operable, it is estimated that the government will have to introduce a series of policies. Only with supporting policies can our company implement it concretely.”
With the increase in China’s influence and the expansion of trade, the use of RMB as a settlement method has begun to be implemented. “Actually, the government is following the path of pilot projects in neighboring countries.” Zhang Yunling, a researcher at the Institute of Asia-Pacific Studies of the Chinese Academy of Social Sciences, believes that “such as China-South Korea currency swap and dual-currency trade settlement between China and Russia are not accidental, and financial supporting reforms are imperative.”
“It needs to be emphasized that using RMB as a means of trade for settlement does not change its inconvertibility under the capital account.” Long Guoqiang, deputy director of the Department of Economics and Trade of the Development Research Center of the State Council, analyzed, “The short-term effect of this policy is Allowing export companies to avoid exchange rate risks can help the RMB develop in the direction of a regional currency in the medium to long term.”
Just as textile companies are concerned, the inconvertibility under the capital account is an unavoidable problem for the RMB to become a regional currency. threshold. In this regard, Long Guoqiang believes that there are two important points in the process of RMB becoming an international currency: the ratio of RMB must reach the equilibrium exchange rate in the market; second, the RMB must be convertible in the capital account market. At present, we will start with trade first, and then gradually enter the capital market, because opening up the capital account should take a cautious development path. The current situation proves that such caution is necessary. In this financial tsunami, China’s financial industry is relatively safe and the currency has not been greatly affected. This is closely related to China’s current financial system.
“The significance of this matter is not only the expansion of border trade, it proves that the government has taken action and actively promoted the RMB process.” Li Daokui, a professor at the School of Economics and Management at Tsinghua University, believes that “the scale of capital market investment is measured in trillions of yuan. If we can deepen financial reform and use Hong Kong’s infrastructure to develop RMB-denominated bonds, the income will far exceed that of trade.”
In response to the question raised by textile companies “What should I do if RMB is used as a trade settlement method and the other party does not own RMB?” , Li Daokui proposed a solution to establish a supporting trade settlement mechanism. He believes that the answer to this question can be explored in many ways. For example, when conducting trade transactions with neighboring countries, if the other party is short of RMB under the same crisis background, you can consider using RMB loans to provide RMB to the neighboring countries; or if the exchange rate fluctuates, can you use swap business, etc. Financial means, protecting the interests of both parties, and maintaining stability can all be ways to explore in the future.��.
Li Daokui believes that the important significance of RMB is that RMB can be used as a commodity for investment in the future market. At present, there are only two types of treasury bonds issued by our country, one is RMB treasury bonds issued domestically; the other is US dollar bonds issued overseas. Issuing RMB overseas bonds may be one of the future trends. AAVBBCNVM,N. KJO
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