RMB Four Days, Three Times Collapse, Why Does The Central Bank Not Care?

The spot exchange rate has exceeded expectations many times, and this is indeed the reason why the renminbi is at the cusp of the storm.

(Finance and economics note: on Thursday, the RMB opened 6.2531 on a spot basis, which was 51 basis points lower than Friday's closing price, 6.1335 less than that of the Friday's central parity price of 6.1335, which is third times the spot rate of RMB's close to the limit within four days.

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Of course, there is a new view of the collapse of the RMB.

It is not because the renminbi is really depreciating, but the dollar is too strong, and the euro and yen are too weak.

You see, though the renminbi has fallen against the US dollar, it can be traded against all other currencies, euro, pound, Japanese yen and Australian dollar.

I really can't see the weakness of the renminbi.

The reaction of the renminbi is nothing more than a chain reaction to the Swiss franc's "off Europe" and the Greek general election and the European version of QE.

What is important and implicit is the attitude of our central bank.

After all, for the Central Bank of China, the way to exchange the renminbi is a bag.

On the one hand, China is currently strictly controlled by foreign exchange, and the exchange rate fluctuations of other currencies will hardly affect the renminbi in an instant.

On the other hand, debt and real estate will not be detonated in China's economically benign and problematic areas. The credibility of the Chinese government can still support global investors' confidence in the renminbi.

On the other hand, the foreign exchange reserves of 4 trillion dollars are not to be said.

So it is impossible to say that the renminbi is out of control and depreciated.

The central bank also knows.

Only since the beginning of 2014, there has been signs of depreciation in the RMB. After this continued devaluation, the central bank has no obvious intervention. It feels that it has already responded to the current RMB devaluation situation.

As commented, the devaluation of the renminbi is not worth paying much attention to in tactics, but strategically speaking, we should pay attention to it.

You see, nearly half a year ago, China's foreign exchange growth rate has basically stagnated. Last December, the foreign exchange balance has returned to its level eight months ago.

It can be seen that the international competition environment facing China is undergoing subtle changes. What is the change? The main reason is that the export of Europe and America to China has increased significantly, especially in the manufacturing sector.

In the past month, several things have attracted the attention of the media.

In January 10th, it was reported that Microsoft plans to close NOKIA Dongguan factory before the Spring Festival. The factory is now rapidly adding production equipment to Vietnam factory.

At the same time, it is located in Beijing.

The NOKIA plant will also be shut down simultaneously.

It is reported that the factories in Dongguan and Beijing of NOKIA have laid off a total of 9000 people.

And a month ago, the first well-known mobile phone parts factory Suzhou Lian Jian Technology announced bankruptcy.

Next, the brothers, the MasterCard and Liansheng company in Dongguan, went bankrupt.

Take the joint construction technology, more than 20000 employees are brilliant.

The two factories of MasterCard and Liansheng have 7000 employees when they fail.

In December 5th, Hong Hui technology, a NOKIA mobile parts supplier in Xu Kou Town, Suzhou, also announced that it had shut down and discontinued most of its employees. The company had a maximum of more than 10000 employees.

Since then, the owner of another famous mobile phone parts manufacturer, Dongguan, Ruth electronics, has lost 135 million yuan in debt and 400 employees have lost their jobs.

At the same time in Dongguan, there is also a manufacturing enterprise that makes a mixed brand of mobile phones, which has lost more than 1000 employees due to the collapse of its capital chain.

More and more people are pessimistic about the prospects of China's manufacturing industry.

People who specialize in manufacturing industry are pessimistic: a more intense and large-scale collapse will probably erupt from January 2015 to mid February.

Because on the eve of the Spring Festival, it is the peak time for enterprises to pay suppliers' wages and employees' wages.

Moreover, it can be seen that the collapse of these large manufacturing enterprises is a terrible follow-up to the "Domino effect", which will result in the collapse of a large number of supporting industries.

This is no more than an increase in the current crisis of China's economy.

Over the past year, the number of unemployed workers who have taken the risk of losing their livelihood and embarked on the crime of robbery or theft has been increasing rapidly.

Last summer, several cases of female college students' disappearance were mostly caused by ninety young people who had no life after the factory closed down or shut down.

In a number of high-level reports, worries about the recent manufacturing industry have reached unprecedented heights.

If our central government does not change its current economic policy, it will create a chain like blow to the manufacturing industry.

The economic policy here refers to China's monetary policy over the years, resulting in an external derogatory rise.

Against this background, high labor costs, rising prices of production factors and falling profits of export products have led to the withdrawal of a large number of low-end manufacturing industries in the US, Europe and Japan or to Southeast Asia, India and other places.

China's hope is in the middle end manufacturing, and it must compete with Germany and Japan.

Before, Germany and Japan had been occupying the middle end manufacturing industry, having both quality advantages, reputation advantages and technological advantages.

Now Europe and Japan are engaged in QE, which has a significant depreciation compared with the US dollar. The price disadvantage made by Germany and Japan will be smoothed out, and the competitiveness of manufacturing industry such as Germany and Japan will be enhanced. In fact, it will suppress the value of RMB in disguise.

If China cannot occupy a place in the middle end manufacturing industry, China will face the hollowing out of the industry. The huge domestic excess capacity will encounter a serious debt crisis.

No matter the laissez faire of our central bank or the QE of Europe and Japan, it is only that countries are trying to get rid of the economic predicament, especially from the exchange rate market, to save their manufacturing industries.

At this time, the exchange rate will be very sensitive, and currency wars will become more and more popular.