Three major boosts to textile and clothing trade from the inclusion of RMB in the basket
Abstract: Recently, issues related to the RMB have once again become the focus of attention in the textile and apparel manufacturing industries. There are three reasons: First, on September 20, the People’s Bank of China issued an announcement authorizing the New York Branch of the Bank of China to serve as the U.S. RMB clearing bank. This not only marks a new level of Sino-US financial cooperation, but is also another important milestone in the process of RMB. As a large economy, the U.S. market has always been a battleground for military strategists. This time the RMB clearing bank
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Recently, issues related to the RMB have once again become the focus of attention in the textile and apparel manufacturing industries.
There are three reasons: First, on September 20, the People’s Bank of China issued an announcement authorizing the New York Branch of the Bank of China to serve as the RMB clearing bank. This not only marks a new level of Sino-US financial cooperation, but is also another important milestone in the process of RMB.
As a large economy, the U.S. market has always been a battleground for military strategists. The establishment of the RMB clearing bank will further facilitate the use of RMB and cross-border transactions in the United States, and promote Sino-US two-way trade, investment and economic cooperation to a new level.
Second, on October 1, the RMB was officially included in the International Monetary Fund (IMF) Special Drawing Rights ( SDR), paving the way for the yuan. The RMB has officially joined the SDR currency basket, which means that both the IMF itself and its 189 member countries theoretically recognize the RMB as a reserve currency.
Third, as industries and capital go abroad through the “One Belt, One Road” initiative, the RMB has also accelerated its pace. Experts pointed out that the population of countries along the “One Belt and One Road” accounts for 60% of the total population and nearly 30% of the total economic volume. The “Belt and Road” strategy will help form a “RMB zone” in this long-span economic corridor.
For example, in December 2015, the RMB-Somoni exchange rate listing transaction was successfully held. Enterprises, individuals and banks in my country’s Xinjiang and Tajikistan can use their own currency and the other country’s currency in financial settlements such as trade settlements. This is also an important sign that Xinjiang actively carries out economic and financial cooperation with Tajikistan and serves “going global” enterprises. .
For another example, in September 2015, the Kashgar region of Xinjiang successfully launched the inter-bank cash exchange rate listing of RMB and Pakistani rupees. transactions and held a launching ceremony at Bank of China Kashgar Branch. This will not only provide convenient conditions for the settlement of trade and investment funds between New Zealand and Pakistan, but will also effectively expand the transaction channels for customers of both parties and expand the scope of financial cooperation.
Recently, a reporter from China Textile News exclusively interviewed Liang Yanfen, director and researcher of the Economic Research Institute of the Ministry of Commerce Research Institute , based on the above three financial events, explore their boost to Chinese textile and apparel export companies.
Promote a stable overseas assets
Depending on the degree, currency can be divided into three levels: as a pricing and settlement method for international trade; An instrument for investment and international lending; used as one of the currencies in other countries’ foreign exchange reserves.
This time, what proportion will the RMB account for in the International Monetary Fund? Liang Yanfen explained to a reporter from China Textile News: “SDR is a reserve asset and accounting unit created by the IMF. Before the RMB was added, it was mainly composed of four currencies: the US dollar, the euro, the Japanese yen and the pound. They were in the SDR currency basket. The shares of the US dollar are 41.9%, the euro is 37.4%, the pound is 11.3%, and the Japanese yen is 9.4%. After the entry of the RMB, the share is 10.92%, and the shares of the US dollar, the euro, the Japanese yen, and the British pound are adjusted accordingly to 41.73%, 30.93%, 8.33% and 8.09%, respectively 0.17, 6.47, 3.21, and 1.07 percentage points lower than before. According to IMF rules, the weight of basket currencies in the SDR is not static. As the use of currencies in trade and finance changes, The IMF adjusts each currency’s share of the SDR every five years.”
Regarding the inclusion of the RMB into the SDR as an international reserve currency and its positive effects on Chinese textile and apparel export enterprises, Liang Yanfen said: Predictions are made from two aspects: “First, joining the SDR means that the RMB has gained international recognition and the credit endorsement of the IMF. For China’s textile and apparel manufacturing industry, it has gained access to international financing.Second, joining SDR will help enhance market confidence in the RMB, stabilize market expectations, further expand the use of RMB in cross-border trade and investment settlement, and is beneficial to the stability of the RMB exchange rate, especially for It is helpful for Chinese textile and apparel companies to stabilize their overseas assets. ”
Boost 2 to reduce export costs
After the United States, a large economy, established an offshore RMB center, its export advantages to Chinese textile and garment enterprises are reflected in several aspects?
In this regard, Liang Yanfen told the reporter of China Textile News that the RMB offshore market is important to speed up the process of promoting the RMB. field, it requires a close fit between supply and demand to be established. The establishment of the RMB offshore center in the United States is, firstly, to meet the needs of the development of economic and trade relations between China and the United States. Secondly, it is a stable, transparent, active and low-risk exchange between the U.S. offshore market and the RMB onshore market, which will help Reduce the risk of RMB cross-border capital movements and the turbulence of the domestic capital market, thereby helping to reduce the cost of China’s manufacturing exports.
The adoption of RMB pricing and settlement will reduce the transaction costs of textile and apparel exports to a certain extent. The main manifestations are as follows: First, speed up export settlement and improve capital settlement efficiency. With the improvement of supporting measures for RMB cross-border settlement, the RMB cross-border trade settlement process will become more convenient and efficient. The second is to avoid exchange losses and save handling fees and foreign currency hedging costs.
Liang Yanfen specifically pointed out that a stable external environment and strong financial conditions will become the greatest competitive advantages for Chinese textile and garment export enterprises. .
However, it should also be noted that the current pricing and settlement capabilities of the RMB are very limited, and the U.S. dollar, euro, etc. are still the main currency of my country’s textile products. An important settlement currency in apparel exports. From the current point of view, the positive effect of RMB on textile and clothing exports has not yet been fully demonstrated.
Boost three to reduce exchange rate risk
Before the implementation of the pilot cross-border foreign trade settlement in RMB, all textile and clothing exports were denominated and settled in foreign currencies, and export collection and Export settlement is completed in two steps. Using the method of foreign exchange pricing and settlement, a sharp short-term depreciation of foreign exchange will bring greater exchange losses to textile and apparel exports.
The post-RMB exchange rate will have certain positive impacts on textile and apparel exports, such as reducing exchange rate risks. However, the development of this positive effect is subject to whether textile and clothing export enterprises have pricing power in export trade negotiations and the extent of the RMB.
To this end, China is actively promoting RMB settlement in the “Belt and Road” countries, including Xinjiang, Pakistan, Tajikistan and other countries. Bypassing direct settlement in US dollars, what are the benefits to Chinese textile and apparel export companies? In what aspects is convenience reflected? What are the motivations for investment and cooperation with Chinese textile and garment enterprises in countries along the “One Belt, One Road” initiative?
Regarding these issues, Liang Yanfen summarized three points to the reporter of “China Textile News”.
First, “One Belt, One Road” is a grand strategy and a long-term strategy. The construction projects require huge funds and a long construction period. In the long run, many countries along the “Belt and Road” are experiencing economic difficulties and political instability. Promoting RMB settlement can at least avoid or reduce exchange rate risks.
Second, China’s textile and apparel manufacturing industries can also be aware of and control risks. Such as budget fund stability, fund payment and transaction convenience, etc.
Third, for the government, taking the RMB’s inclusion in the SDR as an opportunity to promote the Silk Road Fund, the Asian Infrastructure Investment Bank, Bilateral and multilateral financial institutions such as the NDB and the European Bank for Reconstruction and Development, in which my country has a stake, use RMB as the main investment and financing currency, improve the RMB financing support methods for the “Belt and Road Initiative” and international production capacity cooperation, and further expand the role of RMB in two-way investment and foreign aid. use, thereby promoting the use of RMB pricing and settlement of bulk commodities in major trading partner countries.
It can be seen that using RMB for settlement relatively reduces the pricing costs caused by foreign exchange exchange rate fluctuations, and can be used in trade negotiations Lock in the price once and avoid corresponding exchange losses.
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AAA8.75pt; background: white;”> It can be seen that the use of RMB denominated settlement relatively reduces the pricing costs caused by foreign exchange exchange rate fluctuations, can lock in prices at one time during trade negotiations, and also avoids corresponding exchange losses.
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Disclaimer:
Disclaimer: Some of the texts, pictures, audios, and videos of some articles published on this site are from the Internet and do not represent the views of this site. The copyrights belong to the original authors. If you find that the information reproduced on this website infringes upon your rights and interests, please contact us and we will change or delete it as soon as possible.
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