RMB'S Annual Increase Or 7%-8%

Constraints to eliminate the upward trend of annual appreciation

In the light of our recent research, the factors restricting the appreciation of RMB have been eliminated. The excessive growth of exports has formed the demand for RMB appreciation, and the aggravation of imported inflation also needs to be hedged against appreciation.

Therefore, accelerating the appreciation of the renminbi may become an important consideration in the next stage of policy choice. The rate is likely to be much higher than expected. We raised the annual appreciation to 7%-8%.

Restricting the elimination of appreciation factors

In the light of our recent survey, accelerating RMB appreciation may become an important consideration for policy choices at the next stage, which is likely to be far beyond expectations, and we will increase annual appreciation to 7%-8%.

Stage import inflation will become the key to the evolution of inflation. The import price can be directly alleviated by the first quarter. The import price in the first quarter has increased by 14.2%, and the acceleration trend has been accelerated. 2, the export orders in Jiangsu and Zhejiang provinces have been relieved of the worries of revaluation. The appreciation can restrain the excessive export growth to a certain extent, and restrain the export sector and the domestic demand departments competing for electricity and coal resources. It will be wise. 3, the public opinion environment of the appreciation is taking shape, such as the central bank's first exchange rate to resist inflation, and the Ministry of industry and Commerce indicated that the inflationary pressure of imports increased. Earlier, the Xinhua News Agency forwarded Wen's article to concerns about the deterioration of the terms of trade, which may also be a related foreshadowing, because appreciation can directly reverse the deterioration of the terms of trade. The reasons for the above judgment are: 1, regulators may have thought that

Excessive export growth requires revaluation

Only from domestic considerations, the appreciation of the renminbi has always been the right thing to do. The only worry is the impact of export growth.

At present, the electricity consumption in Jiangsu and Zhejiang coastal areas is overloaded and export orders are full, indicating that demand growth in the export sector is already too high and needs to be suppressed.

From the perspective of economic equilibrium, it is wise to curb excessive export growth to a certain extent by restraining the appreciation and restraining the "export sector and domestic demand departments scramble for domestic coal, electricity and oil pportation resources".

2, in March, Zhejiang, Jiangsu and Fujian increased by 19%, 22% and 28% respectively, which were systematically higher than the 14% level of the whole country. The utilization rate of power generation in Jiangsu and Zhejiang provinces correspondingly increased rapidly, and the electricity consumption began to peak in some parts of the country. This proves that after the Spring Festival, the growth rate of the export sector has been too fast, and began to compete with the domestic demand departments for public basic resources such as electricity and coal.

This point is not only mentioned in many micro reports, but also issued by the NDRC in the near future on the notice of "regulating the operation of electric power in 2011" and "an urgent notice on effectively protecting the supply of electric coal and stabilizing the price of electric coal".

Appreciation restrains exports from the margins. Why do the two happen simultaneously?

This is mainly due to the fact that exports are fundamentally more affected by the global economic growth. The global economic expansion has promoted China's export growth and ultimately promoted the appreciation. Therefore, from the time we have seen, the acceleration of export growth and appreciation has occurred simultaneously. In 2007, the export increased by 25.6%, the renminbi rose by 6.1%; the 2008 export increased by 17.5%, the renminbi rose by 6.1%; in 2009, the export declined sharply, the RMB ceased to appreciate all year round; after June 2010, the export confirmed recovery, and the appreciation restarted.

In fact, if there is no appreciation, we can see a faster export growth. Therefore, it is not contradictory to curb exports at the margin of export and the same as export appreciation.

The sustained growth of exports has been an important foundation for accelerating the appreciation in the future, and the excessive growth of the export sector beyond the economic burden has directly raised the demand for appreciation.

Import inflation is aggravated by appreciation hedging.

In the first quarter, China's import price reached 14.2% year-on-year, which was 10.9% and 9.8% respectively in the three and fourth quarter last year.

At the next stage, imported inflation will replace the inflation of non international trade goods such as rent, labor, short distance pportation of fresh food and so on, and become the key to the overall inflation evolution. Appreciation is a direct and effective hedge measure.

In particular, the price rise of products outside the country, China's monetary and fiscal policy is difficult to exert effective influence, only to accelerate the appreciation to a certain extent, inhibit the price of products.

The above relationship is clear in historical evidence. The import price index in 2007 and 2008 also increased rapidly, resulting in 6.1% RMB appreciation in two years. From the monthly data, the import price accelerated after the two quarter of 2007, and the monthly appreciation of RMB also accelerated correspondingly, which led to an appreciation rate of 9.8% in the second half of 2007 and the first half of 2008. That is, although the appreciation of 6.1% has increased by 6.1% over the past two years, there has been a period of concentrated appreciation.

Based on the above reasons and the recent observation on the exchange rate issue by regulators, we believe that the public opinion environment and the real economy requirements for accelerating appreciation are taking shape, and the annual appreciation will be forecast to 7%-8%.