Interesting words from Andy Xie, putting renminbi revaluation into Chinese context.
The net margins for China’s exports based on the information from the companies listed in Hong Kong and Taiwan are around 5%. With 50% costs local, 10% currency appreciation could wipe out the profits in the export sector. The exporters may be able to raise prices, but maybe not. A big appreciation will trigger some economic instability. China does not need that.
If true, this simple fact would make revaluation highly unlikely.
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