First, the development of basic industries and traditional exports has been hit hard. The biggest advantage of my country’s export trade lies in low prices. However, as the RMB exchange rate rises, the prices of my country’s export products and services continue to rise, and the original price advantage is gradually lost, which has caused a huge impact on my country’s export trade. Coupled with the rise in the RMB exchange rate, the prices of foreign products exported to my country have relatively decreased, which in turn has affected domestic industries by fierce competition.
Second, the total domestic demand has been restricted, and it has become more difficult to solve the employment problem. An increase in the RMB exchange rate will cause a low consumption rate in a short period of time, which will inevitably suppress my country’s total demand, thereby curbing the overall economic development, reducing employment opportunities and rising unemployment. In particular, traditional labor-intensive export industries will definitely be affected. The unemployment problem within the industry has gradually become prominent.
Third, rising financial market risks have caused asset bubbles to occur. my country’s financial market is still imperfect, and financial tools used to hedge risks are very scarce. At the same time, some domestic financial institutions have huge non-performing assets, which makes my country’s financial system very vulnerable to shocks. The rise of the RMB exchange rate will gradually lead to greater appreciation, and thus more capital inflows will be introduced, leading to more obvious external imbalances, false prosperity bubbles may also appear, mistakenly introducing economic development in the wrong direction , Leading to potential threats and risks.
Fourth, the internal pressure of rising RMB exchange rate. The continuous appreciation of the renminbi and the continuous depreciation of the U.S. dollar have caused huge losses in the country’s foreign exchange reserves. In addition, my country’s fiscal system has many imbalances, including large-scale bank bad debts, social security fund gaps, local government debts, and urgent The huge pressure to create job opportunities, etc., these hidden fiscal deficits can all be regarded as internal pressures for the rise of the RMB exchange rate.