RMB Revaluation Will Test Taiwan Exports

RMB Revaluation Will Test Taiwan Exports
China Times editorial (Taipei, Taiwan, ROC)
A Translation
June 22, 2010

This weekend the Group of Twenty (G20) Summit will be held in Toronto, Canada. On the 19th, the Bank of China (PBOC) announced that it would take another step toward the formation of a RMB exchange rate mechanism. The RMB would no longer be pegged to the U.S. Dollar. This policy statement was interpreted as a positive response to international calls for the upward revaluation of the RMB. It may help resolve Sino-US trade tensions. On Monday the RMB rose sharply against the dollar. It closed on a new high, the highest since July 2005. Asian currencies and stock markets rose in tandem. The US and the EU are certain to return to a floating exchange rate mechanism.

The PBOC stressed that the RMB will be pegged to a basket of currencies, rather than the USD. The RMB would not be revalued upward in a single move. The RMB is currently not subject to sharp fluctuations. This statement clearly shows that the RMB will not be revalued abruptly in a single move, and will not be subjected to floating range trading practices.

During the September 2008 financial crisis Asian currencies plummeted one after the other. The Bank of China pegged the RMB to the dollar, and played a key role in ensuring stability. Since the beginning of this year, international pressures for the upward revaluation of the RMB have increased. News reports note that in early April the Beijing authorities undertook exchange rate reform. They intend to allow the RMB to float periodically. A second earthquake and the European debt crisis forced the postponement of these reform measures until the end of June.

The Beijing authorities have always adopted a hardline attitude in response to international calls for RMB revaluation. They have always said that the yuan is a Chinese currency, and must not be the target of irresponsible remarks by the international community. The current PBOC statement stressed that RMB exchange rate reform would help fluctuations remain within a controllable range, consistent with mainland China's economic fundamentals and macro-control needs, and that it would adopt a gradual approach. The current change will help mainland China's balance of payments, and is not directed at bilateral trade issues with any particular country.

The market believes the new wave of RMB revaluations will not be too large. This year the RMB rose 16.5% against the Euro. This has seriously eroded the profitability of mainland China's exports to Europe. New York University economics professor Nouriel Roubin thinks if the Euro continues to weaken after the RMB adopts floating range practices, that it may need to be devalued. According to a Bloomberg News survey, RMB Exchange Bank personnel expect it to appreciate about 1.9% before the end of the year

It is generally believed that the return to a floating range RMB exchange rate mechanism demonstrates mainland China's confidence in an economic recovery. For the mainland, it will help contain inflation and promote economic restructuring. The appreciation of the RMB will be conducive to industries keyed to domestic demand. Airline and metal stocks in particular have soared, and people's purchasing power has increased. Upward revaluation will also improve the standard of living. Internationally, RMB revaluation will reduce the imbalance in global trade, in particular under-consumption in the United States and Europe. The United States hopes the mainland Chinese domestic market will play a balancing role.

Observers have long expected a revaluation of the RMB. But Foxconn is being battered by waves of wage increases. The revaluation will have a considerable impact on mainland China's export-oriented businesses, as well as Taiwan businesses on the mainland. The PBOC statement stressed that reform will promote industrial upgrading, reorient the economic development model towards domestic demand, and shift export industries from simple processing to advanced processing and finishing. Reform will help employees shift from manufacturing jobs to service jobs. This statement clearly shows that Taiwan businesses can no longer rely on export-oriented exchange rate advantages to earn a modest profit. They must make a full commitment to transformation and upgrading.

Consider the upward revaluations of the NTD between 1986 and 1989. Shoes, umbrellas, sunglasses, household appliances, textiles, and other industries gradually moved to the mainland in search of low cost labor and land, and established a whole new realm on the mainland. Between 2005 and 2008, the RMB rose 21% against the USD. Mainland wages rose, and environmental conditions improved. Taiwan businesses moved once again, this time to Vietnam, Indonesia, and Southeast Asia. Over the years, Taiwan businesses have used mainland China's vast low-wage labor resources and favorable exchange rates to create numerous OEM miracles.

Now, a new wave of RMB revaluation, however modest, means that mainland China has begun changing its industrial structure. An increased emphasis on domestic demand will test export-oriented Taiwan businesses. They will face pressure to move upmarket. Only by adding value can Taiwan businesses prevail. OEM industries must make the transition to branding. The road may be hard, but computer industry success stories include Acer and ASUS. Only by developing one's brand, can one integrate one's resources in the production chain. Otherwise one will be forced to offshore once again in search of lower wages.

中時電子報 新聞
中國時報 　2010.06.22
社論－人民幣升值趨勢考驗出口台商
本報訊

本周末二十國集團(Ｇ20)將在加拿大多倫多召開高峰會，中國人民銀行（人行）十九日宣布進一步推進人民幣匯率形成機制改革，不再緊盯美元，各界解讀這項政策宣示有助於轉移國際間對人民幣升值的壓力，並化解中美之間貿易緊張關係。周一人民幣兌美元匯率勁揚，收盤升至二○○五年七月以來新高，亞洲貨幣、股市亦同步上漲，美國與歐盟均肯定人民幣匯率回歸浮動機制的作法。

人行強調，人民幣將依一籃子貨幣進行調節，不會緊盯美元，更不會一次重估人民幣價值；當前人民幣不存在大幅波動和變化的基礎。這項說法明白顯示，人民幣不會採取一次性大幅升值以及放寬浮動區間的作法。

二○○八年九月金融海嘯期間，亞洲貨幣紛紛貶值之際，中國人民銀行將人民幣匯率盯住美元，扮演了穩定的關鍵性角色。今年初以來，國際間對於人民幣匯率升值的預期越來越高，媒體報導指出，其實中國官方原本打算四月初就採取匯率改革，讓人民幣回歸區間浮動機制。後來接連爆發地震與歐債危機，才使得這項匯改措施延後到六月底。

對於國際間要求人民幣升值的聲浪，北京當局向來態度強硬，並表示人民幣是中國貨幣，不容國際說三道四。這次人行在聲明中特別強調，人民幣匯率改革是在確保匯率波動幅度可控範圍內，符合中國經濟基本面和宏觀調控的需要，並且採取漸進方式。這次的匯改有助於中國的收支平衡，不是針對與特定國家的雙邊貿易問題。

市場普遍認為新一波人民幣升值幅度不至於太大，此外，今年以來人民幣兌歐元升值了十六．五％，已嚴重侵蝕中國對歐洲出口的獲利。紐約大學經濟系教授盧比尼甚至預期，如果歐元繼續走貶，人民幣改採區間浮動之後，可能貶值。據據彭博社調查，匯銀人士預期人民幣今年底以前升值幅度約一．九％。

一般認為，這次人民幣匯率回歸區間浮動機制是中國對經濟的復甦展現了信心，對大陸內部而言，有助於抑制通貨膨脹，並且促進經濟結構的轉型。人民幣的升值有利於內需產業，特別是航空與金屬類股均大漲，人們的購買力提高了，也有助於提升生活水平。在國際上，人民幣的升值有助於改善失衡的全球經貿，尤其美、歐的消費低迷之際，美國一直希望中國內需市場可以發揮平衡的作用。

儘管外界對人民幣匯率的升值早有預期，不過，此時在富士康掀起的加薪風潮下，這項升值仍對中國出口型企業與大陸台商造成相當的衝擊。人行在聲明中強調，改革有助於推動產業升級，調正經濟發展模式，朝向內需型發展，並將促使出口產業從簡單加工，轉向深加工與精加工，有助於就業人口從製造業向服務業移轉。這項說法明白顯示，出口型台商不能再依賴匯率優勢賺取微薄利潤了，必須要有全力轉型與升級的決心。

回顧一九八六年至八九年那一波新台幣升值風潮期間，國內包括鞋、傘、太陽眼鏡、家電、紡織等產業紛紛外移到大陸尋求低廉的工資與土地，在大陸開創另一片天；二○○五年至 ○八年間，人民幣兌美元升值了廿一％，大陸工資與環保條件也普遍提升，台商則進一步往越南、印度與東南亞發展。這些年來，台商利用大陸龐大而低廉的工資與匯率，創造了多項代工王國的奇蹟。

如今，新一波人民幣升值趨勢啟動，儘管幅度不大，卻意味著大陸正展開產業結構的調整，逐步重視內需產業，對出口型台商更是一大考驗。面對升值的壓力，台商唯有提高附加價值才能勝出，在發展代工產業之餘，也必須朝向品牌之路，這條路雖然艱辛，但電腦業如宏碁、華碩都是成功的案例。唯有發展品牌，才能在產業鍊中掌握整合資源的能力，否則只有被迫再轉移他地尋找更低廉的工資了。