How will the US dollar interest rate hike affect China's foreign trade?

1. It is conducive to increasing China's exports to the United States, especially to enterprises in textile and clothing industries.

At present, the United States is China's second largest trading partner and the largest export market, and the total bilateral trade value accounts for about 15% of China's total foreign trade value every year, especially for China's textile and clothing industries, the United States has always been the main export market. The US interest rate hike indicates that the US economy has substantially recovered after the financial crisis, and the demand for terminal consumption will increase. At the same time, the return of international capital to the United States will promote the appreciation of the US dollar and weaken the international competitiveness of its own products, which will help reduce the competitiveness of Chinese export enterprises, especially textile and clothing enterprises, improve their products exported to the United States, increase exports to the United States and expand the surplus, and ultimately drive the growth of the entire export volume.

2。 It is beneficial to reduce the import cost of energy resources products, increase the import quantity, and relieve the pressure of domestic energy resources and environment

The interest rate increase in the United States and the appreciation of the US dollar will push down the international commodity prices denominated in US dollars. Since the second half of 214, the prices of international commodities such as crude oil and basic metals have fallen to the lowest point in recent years, which is conducive to reducing the foreign exchange expenditure and cost burden of China's energy and resource products importers, and also conducive to China's expanding utilization of international resources, increasing energy resources imports, and alleviating domestic energy resources constraints and environmental pressures.

3。 On the one hand, in the medium and long term, the withdrawal of quantitative easing and interest rate increase in the United States will mean the normalization of its monetary policy, the risk of excess liquidity and asset bubbles in the global economy will be reduced, thus helping to create a relatively stable international economic environment for China's economy, and the credit of RMB will be further improved; On the other hand, after the normalization of monetary policy in the United States, the international community's demand for global macroeconomic policy coordination, crisis response mechanism, stable currency and other international public goods will increase, especially after the RMB officially joins SDR (Special Drawing Rights) on October 1, 216, it will become the foreign exchange reserves of other central banks, and the demand for RMB in the foreign exchange market will increase, which will provide a rare opportunity to accelerate the internationalization of RMB.

(2) Disadvantages

1. Increase the uncertainty of global economic recovery and affect the external environment of China's economic development < P > At present, the foundation of global economic recovery is still relatively weak, and developed countries and emerging economies are facing new problems: due to the sovereign debt crisis, European economic recovery is still weak, and internal economic differentiation is becoming more and more obvious, and internal coordination is difficult; Although the Japanese economy has improved after the stimulus of quantitative easing, the long-standing structural problems have not been solved and the growth momentum is insufficient; The income of many export-dependent emerging economies has declined and economic growth has slowed down; The downward pressure on China's economy is prominent, and the economic structure needs to be optimized urgently. The interest rate hike in the United States means that the loose monetary environment that supports the slow recovery of the global economy has changed in recent years, which has a significant impact on emerging economies that borrow a lot of US dollar debt, and countries that mainly export commodities have created double pressures, thus increasing the uncertainty of the global economic recovery.

2。 May lead to regional financial turmoil and even crisis, and then spread to financial stability in China

Historical experience shows that the Fed's interest rate hike after long-term low interest rates will often lead to major adjustments in the pattern of international capital flows, leading to local financial turmoil and even crisis, especially in emerging market countries. The interest rate increase in the United States will lead to the reversal of global capital flow, and capital will flow out from some emerging economies and resource exporting countries, which will lead to the depreciation of their local currencies and increase the debt burden, which will further lead to financial turmoil and even crisis in some regions, which will further affect China's financial stability or make potential problems such as China's real estate market, local debt, shadow banking and debt structure and maturity mismatch in some real economies manifest.

3。 In the long run, pushing the exchange rate of the US dollar to strengthen will bring depreciation pressure to the RMB

Raising interest rates in the United States will push international capital back to the United States, which will lead to the strengthening of the US dollar, and the exchange rate of the US dollar may enter an upward channel, further changing the risk appetite of international capital. If the RMB follows the strength of the US dollar, it will lead to a serious overvaluation of the RMB exchange rate, thus causing the risk of RMB depreciation at any time. In addition, after the US interest rate hike, the spread between China and the United States will narrow, and China will face international short-term capital outflows, which will have an impact on domestic asset prices and the RMB exchange rate. The RMB will also bear the pressure of depreciation, and the international market may also form the expectation of RMB depreciation, resulting in speculation and arbitrage transactions.

4。 Promote international capital to flow back to the United States, which will affect China's attraction of foreign direct investment (FDI)

With the increasingly stable economic recovery in the United States, the promotion of the "re-industrialization" strategy and the cost advantage brought by the shale gas revolution, after the interest rate increase in the United States, the yield of American bonds will rise, and the long-term global capital flowing to developed economies such as the United States will further increase in the future, which will greatly divert global FDI. At the same time, China is currently facing the pressure of aging population structure, rising labor costs and increasing constraints on resources and environment. The superposition of the two functions will increase capital outflow and form an unfavorable cycle, which will affect China's economic development by using foreign capital for a long time.

5。 Before increasing China's export pressure to markets outside the United States < P >, the nominal effective exchange rate of RMB rebounded obviously and strengthened relatively, which reduced the competitiveness of Chinese enterprises in the international market. In addition, the appreciation of the US dollar has driven the credit of enterprises in emerging market countries to decline, the financial environment has deteriorated and exports have declined. In order to maintain market share, more and more emerging markets and developed economies such as Japan and the European Union have joined the camp of currency devaluation, which will not only lead to currency devaluation, but also aggravate global trade and currency friction, and will also lead to "excessive appreciation" of RMB against non-US dollar exchange rates such as Euro, Japanese yen, Korean won and Australian dollar, which will lead to a sharp decline in China's exports to Europe and Japan. According to statistics, China's exports to the EU, Japan, ASEAN and India all declined in November. After the United States raises interest rates, China's exports to the European Union, Southeast Asia, Latin America and other regions will face greater competition pressure and more trade frictions in the future.

6。 Increase the dollar-denominated debt burden of domestic enterprises, and increase the bad debt rate of banks

According to the calculation of the Bank for International Settlements, under the condition of zero interest rate in the United States since the financial crisis in 28, non-dollar countries have issued a large number of dollar-denominated debts. Among these new debts, China accounts for the largest share. Due to the high level of dollar-denominated debt of Chinese enterprises, this means that once the US raises interest rates and pushes up the exchange rate of the US dollar, these enterprises may face difficulties in repaying loans: on the one hand, borrowing in US dollars will be more expensive; On the other hand, if you can't earn more dollars, a strong dollar means you have to pay more local currency to repay your debts. In the context of the current economic slowdown, industries such as high leverage real estate development may be hit hard, and credit debt default is at risk, and many enterprises still fail to pay money, resulting in an increase in the bad debt rate of banks. For domestic energy resources producers, the decline in international commodity prices has further increased their business difficulties and increased the pressure of production and operation.

7。 Increasing the downward pressure on the prices of domestic industrial means of production and increasing the risk of deflation

The US interest rate hike and the appreciation of the US dollar will lead to the continued decline in the prices of primary raw materials and commodities such as iron ore, international crude oil and coal, which will increase the global deflationary pressure. At present, although China's overall price level (CPI) has maintained a year-on-year growth of about 1.5%, and has not entered a state of deflation in the traditional sense, the PPI, which reflects the price trend of domestic industrial means of production, has been declining for 44 consecutive months. Due to the high dependence of China's commodities on foreign countries, if the prices of international commodities continue to decline, it will inevitably lead to a further decline in the prices of domestic industrial means of production, which will eventually be transmitted to consumer terminals and increase the risk of deflation.

II. Relevant policy suggestions

To sum up, although the US interest rate hike will do more harm than good to China, it will have a limited impact on China's economic growth as a whole, and it will not have a strong impact on the domestic market, so there is no need to be overly afraid and pessimistic about it: First, the Fed released the news of interest rate hike very early, and the policy decision-making process is highly transparent, which gives the market sufficient time to form and digest the expectation of interest rate hike in advance. China has already made plans for this, and adopted a series of active coping strategies and mechanisms. Second, the interest rate hike in the United States also has a certain negative impact on its own economic growth, and the current world economic recovery is slow, which determines that its interest rate hike will not be large and the frequency will not be too fast. Third, although the downward pressure on China's economic growth is still relatively large, the economic fundamentals are good, the financial situation, financial stability and foreign debt scale are within a reasonable and controllable range, and there is still huge room for development in domestic demand, industrial upgrading and overseas investment, and it is capable of maintaining medium-and high-speed economic growth. However, we should also make a timely judgment on the US interest rate hike and prepare for it.

first, strengthen the research on the trend of monetary policy in major countries in the world.

The interest rate increase in the United States will definitely trigger other major countries such as Japan and the European Union to adjust their monetary policies accordingly. China should closely track and judge the trend of monetary policies in major countries and the possible impact, study and estimate the scale and situation of hot money transactions brought by the adjustment of monetary policies in major countries, study and formulate new management systems and new methods to deal with cross-border capital flows, and make relevant countermeasures.

second, maintain an appropriately loose monetary policy.

in the face of the slowdown or even outflow of cross-border funds and the decline of the water level in the domestic "fund pool", we should increase flexibility while maintaining appropriate monetary policy easing, and make policy adjustments accordingly. The key is to keep the base money delivery channel smooth and stable, and adjust the market liquidity flexibly by increasing the open market operation, adjusting the deposit reserve ratio and even adjusting the interest rate in a timely manner. While avoiding macro-economic deflation, we should revitalize the financial stock to reduce financing costs, strengthen the supervision and crackdown on hot money, strengthen the management of overseas capital flows in China, and keep the bottom line of no systemic financial risks.

Third, be cautious about the opening of short-term capital.

the interest rate hike in the United States has brought some pressure on China's foreign exchange, currency and capital markets. If the capital market is opened too quickly in the short term, this pressure will be greatly amplified, resulting in a situation in which short-term capital is fast-forward and fast-out. Therefore, starting from the policy goal of maintaining the stability of the financial system, we should slow down the pace of opening the capital account, control the entry and exit of capital in the short term, prevent the abnormal outflow of capital, relax the entry threshold of foreign capital, further improve the investment environment, retain foreign capital and attract new investment, and vigorously improve the efficiency of foreign capital use. China's huge market demand is still very attractive to foreign investors. We should not only continue to attract foreign direct investment, but also expand the overseas direct investment of countries and enterprises, and accelerate the transformation from "making money by labor" to "making money by capital".

fourth, expand the fluctuation range of RMB exchange rate in a timely manner and promote the reform of RMB exchange rate formation mechanism.

In the case of drastic changes in global capital and the impact of hot money on RMB exchange rate, we can consider relaxing the fluctuation range of RMB exchange rate to enhance the flexibility of RMB exchange rate and release related pressures and risks. After raising interest rates in the United States, we can guide the RMB exchange rate to adjust downward moderately to cope with the possible appreciation of the RMB relative to other currencies in the future. In addition, at present, the strong correlation between RMB and USD greatly weakens the independence of China's monetary policy, and it is easy to fall into the dilemma of monetary policy choice when facing the impact of austerity. We should promote the reform of RMB exchange rate formation mechanism as soon as possible and appropriately adjust the weight distribution in a basket of currencies to reduce the correlation between RMB and USD.