US Dollar Interest Rate Increases Exports

Now, how does the "boots" of the Fed raise interest rates finally fall to the ground? How will it affect the Chinese economy? What is the extent of the impact? Professor Lang Lihua, Dean of the school of economics, Capital University of Economics and Business, told reporters that raising interest rates to the Fed would not necessarily be a bad thing for the Chinese economy. "At least conducive to China's foreign trade exports." From the Fed's current stance, it may increase interest rates by 3 times in 2017, and of course not necessarily 3. "But it can be confirmed that the Fed's rate hike has been opened.

The Fed's rate hike means a further appreciation of the dollar. Since August this year, the RMB exchange rate against the US dollar has been in a downward trend, and the same dollar can buy more commodities, which is conducive to expanding overseas demand, because of the global foreign trade Most of them are settled in US dollars. The US dollar interest rate increase shows that the US economy is in constant improvement, and the demand in the US will expand, which will stimulate our exports.

The latest November foreign trade data show that China's foreign trade exports amounted to 1 trillion and 320 billion yuan, an increase of 5.9% over the same month, much higher than the expected -1.0%. "RMB depreciation is especially beneficial to China's traditional labor-intensive industries. These enterprises had difficulty in survival, such as export of textile and clothing, electromechanical products and so on. Lang Lihua said. Of course, the cost of imports will increase, including imports of iron ore, crude oil and so on.

Ningbo's future home Limited by Share Ltd is mainly engaged in the import and export business of light household products. Li Chen, chairman of the company, told reporters that the European market accounted for 70% of the company's export business, and the US market accounted for about 10%. Li Chen believes that the devaluation of the RMB will help increase exports, but more importantly, it is still necessary to reduce operating costs in China, so as to enhance competitiveness.

A main camp in Haining Polyester industry The enterprises of filament and tire cord fabrics account for more than 3/4 of the sales volume at present. Among them, the European and American market accounts for the majority, and profits have maintained steady growth in recent years. "The depreciation of the renminbi is certainly beneficial to the growth of foreign trade orders, but the renminbi actually appreciates against the euro. In addition, although the RMB depreciates against the US dollar, the currencies of other countries are even more devalued against the US dollar, which also exports to the European and American markets, and the competition is fierce. The company's relevant person in charge said.

The adverse effect is that as the Federal Reserve enters the interest rate channel, capital outflows will intensify, and it will increase the expectation of RMB depreciation. "Foreign investment in China will be reduced, hot money will accelerate back to the United States, and domestic capital will also flow out." Lang Lihua said. However, Lang Lihua believes that the market actually expects the fed to raise interest rates earlier, so the impact on the market will not be too great. In December, when the Federal Reserve raised interest rates for the first time in nearly 10 years last year, the market expected to raise interest rates by two or three times this year.

Professor Xu Min, School of finance, Zhejiang University of Finance and economics, said Fed raise interest rate The impact on the market is not large, because the market has fully anticipated before. The market is more concerned about the future Federal Reserve's interest rate raising path. In the next period of time, if the dollar is strong and the renminbi weaken, it will be beneficial to export enterprises, but not conducive to imports. If there are domestic substitutes for imported products, the cost can be reduced by reducing imports. If there is no substitute product, the expenditure will increase. " On the other hand, as the domestic economy is still in the process of transformation and upgrading, the Fed's interest rate increase and the appreciation of the US dollar are somewhat unfavorable to the domestic economic recovery.

Similarly, Xu Min believes that for the United States, if the current economic growth is mainly driven by domestic demand, a strong dollar is beneficial to the US economy, because it can attract more funds to return to the United States and stimulate its economy. However, if a large part of the current growth is driven by external demand or export, the appreciation of the US dollar is obviously unfavorable to the US foreign trade export.

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