Three reasons why the Sino -U.S. Trade war will not fall sharply.

Author: He Jingyi

The market has different opinions on the market outlook.Fa Xing Bank said that the central government has enough tools and experience to control the exchange rate. It is believed that only the central government wants to break 7 would the renminbi have the opportunity to fall below 7.The Bank of America Merrill Lynch believes that before the G20 summit at the end of June, China will continue to maintain the RMB below 7. However, if the Sino -US trade negotiation fails, the RMB will be depreciated to 7.13 to implement measures to stimulate economic and currency loose measures.The Star Show Research Department also has even more frightened predictions. If the trade war is expected, the RMB will have the opportunity to depreciate to nearly 8, that is, the Hong Kong dollar currency value will surpass the RMB again.

Different from other currencies in the world, the central government has a strong ability to manage and control RMB, and the central government's position will greatly control the future trend of the RMB.Regarding the recent depreciation of the renminbi, central officials also shouted intensively, emphasizing that the market conditions are stable, no, and no accidents.

The analysis pointed out that the dense statement of Chinese financial officials clearly reflects the determination of the central government's determination to control the outflow of capital and ensure that the RMB exchange rate is stable. It is expected that the RMB to break the US dollar in the first half of this year.Bloomberg reported that in comprehensive market observation, international investors are still quite jealous of the Central Bank of China to intervene, making the RMB exchange rates relatively stable.In fact, the central government only used oral intervention and the middle price of the RMB to keep the signal of 6.9 for many days, helping the RMB exchange market to stabilize, the RMB price recovered at 6.9, and the offshore price rose 6.91.

Some investors believe that with the intensification of Sino -US trade disputes and the negative impact on the Chinese economy further emerged, the central government will have to regard the devaluation of the RMB as one of the weapons of the trade war.As early as last year, the central government intended to use Renminbi as a counterattack measure. Bloomberg quoted sources as saying that senior Chinese officials were studying the depreciation of the RMB as a bargaining chip with the United States.In response, Sheng Songcheng, a counselor of the People's Bank of China, emphasized that the People's Bank of China did not actively guide the depreciation of the RMB, and some people of the central bank also told the media that the central bank did not take the initiative to implement the depreciation strategy.

There are three major reasons for the central government.First of all, the impact of Sino -US trade disputes or exaggerated by the outside world, the impact on China's economy and exports is still in a controllable range.The Sino -US tariff war has been entangled for a long time. In the past, each US President Trump proposed a new tariffs on Chinese goods. There will be a round of pessimistic emotions in the Chinese economy.However, last year, China's import and export volume still increased steadily. Among them, imports increased by 15.8%year -on -year, and exports increased by 9.9%year -on -year. The foreign trade structure also improved.

By the first quarter of this year, China's economic performance was surprising. GDP (GDP) increased by 6.4%year -on -year, higher than the market expectations of 6.3%.Last week, the report jointly issued by the Comprehensive Department of the Ministry of Commerce and the International Institute of International Trade and Economic Cooperation stated that the long -term fundamental fundamentals of China's economy have not changed, the vitality of foreign trade has continued to increase, and the foundation of high -quality development has continued to consolidate.It can be seen that it is still earlier to assert that the money depreciation of the currency.

Another reason that the central government will not take the initiative to lower the value of the RMB to stimulate exports is that this method will damage people and self -interest, which is easy to launch the whole body and trigger a new round of currency depreciation in the new country in the area.As the largest exporter in the world and the second largest importer, China has stimulated exports through currency depreciation, not only the United States, but also all countries that have major trade with China.In recent years, China has continuously developed its business and trade with more countries through national policies such as the Belt and Road Initiative. According to the latest figures, the European Union continues to be the largest trading partner in China, with a total trade value of 15.8%, followed by Yajian (13.3%) and the United States (the United States11.6%), Japan (7.2%), and countries along the Belt and Road are 28.6%.

China's continuous expansion of international business landscapes, one to develop more markets and business opportunities for Chinese companies, and the other is that China is less likely to be affected by trade disputes with individual regions (such as the United States).After the Sino -US tariff war began, affected by the tariff barrier, China ’s exports to the United States fell by 8.8%year -on -year in the first quarter of this year.%Of export growth will not retreat from exports.At the critical moment when China needs more friends instead of enemies in the international business market, the central government will naturally not offend the risk of other trading partners and take the initiative to take the initiative to lower the RMB.

One of the last and most important reasons for the central government will not allow the RMB to depreciate sharply. This will hinder the pace of internationalization of the RMB.The internationalization of the RMB, which makes the RMB a international currency with both the function of the price, settlement and reserve, is one of the most important financial reform goals in the Mainland.

As the world's second largest economy, China is seizing the opportunity to deepen the internationalization of the RMB, attract more countries and investors to adopt RMB for savings and payment, and more large commodities use RMB to be priced.The internationalization of the RMB, in addition to the active promotion of the central government, also requires the cooperation of global investors' demand for the renminbi.

For international investors, including central banks of various countries, to attract them to hold more RMB, in addition to RMB dependency products, it is enough to ensure the stability of RMB purchasing power.Imagine that if the RMB is ups and downs, or even some emerging currencies can fall ten percentage points overnight, how to attract international investors.Therefore, in order to win the internationalization of the RMB internationalization, the central government will not take the initiative to easily lower the RMB exchange rate, or to allow one -way unidirectional expectations of the RMB to depreciate sharply.