The appreciation of RMB

  In the long run,china will experience the appreciation of RMB? What is the result of appreciation? If you see from the exchange rate will can see the figture is decreasing.On one hand,It means the commodity we export is becoming more expensive for the foreign comsumers and importers,on the other hand it means the things we import becomes cheaper.

   If the commodity we export becomes expensive ,it means the speed of export growth will come down.And this maybe a good news for US and China itself.Some one think that the appreciation will stop or decrease the growth of export and then cool down the hot china economic????Is it true? I think i should say no.In economics,we should say yes,but in the real world ,what is the situation? The fact is that trade surplus is mostly caused by the process trading.Another thing we should not forget is that china have a supply of over 8 billion of low price work force and the quality of the work force is improving.By the way ,the number of high-value-added  products we export is growing bigger.So the impact of slow appreciation of RMB is very slight on the export in my view.So if the import is constant,the trade surplus will not largely decreasd by the non-explorsive appreciation.This a structural problem for chinese gorverment.So in the coming years ,the appreciation of RMB will go on and the situation will remain unchange for about 5--10 years.

   If you have read the news often ,you will see the capital or so called "hot money" is slipping into china market through legal or unlawful way ,such as the stock market or the real estate.This phenomema is rathar similar to the 1990's japan's.The different things is that the china government still put a hand on the capital item.The hot money is the main reason for the sharply increasing of the housing and stock indexs.Today sina.com posted a news that In Chongqin the Hot money is rush into Chongqin's estate market in a much more quick step.If the capital is chasing the profit ,the china market is their best target especially in the huge-profits estate .The real estate is too complicated for us to discuss in short and plain texts ,so let's overlook it.

  As a whole ,the appreciation of RMB will not benefit common people like you and me.Cos the flooding capital will force the CCB to issue more money to  strike a balance.So the supply of money including M1,M2,will increasing passively.So what we can see is that the CPI will rocketing up and the speed of your salary is far less than the speed of housing and pork price.