The Renminbi Appreciation During Chinese Economic Growth

Since our Reform and Open Policy was implemented,our economy has increased very rapidly.The GDP has grown at high rates,even at more than 10%in recent years.Both the current account and capital &financial account have been in surplus state.The foreign reserves have been increased to usd 1953.7 billion till now.Meantime,hot money is striking our financial system and foreign governments also put pressure onto China to let Renminbi appreciate. Therefore.Renminbi faces huge appreciation pressures.On one hand,Renminbi appreciation has unfavorable effect.Renminbi appreciation will increase the pressure of export enterprises,decrease the foreign investment,and make the foreign reserves shrink.On the other hand,Renminbi appreciation has favorable effect.It will help to upgrade the industry structure,make the production cost decline,ease the burden of foreign loans and curb the inflation.Germany and Japan also experienced the fast economic growth and foreign exchange appreciation.Japanese Yen had a last and wide appreciation,which gave rise to the 10-year-economic depression.However,Germany laid emphasis on the independence of domestic money policies and let the Deutsche Mark float freely,which brought lower inflation rate and stable production.We should learn from international experiences.Renminbi should have an active,low and gradual appreciation.On the meantime,China should keep the independence of domestic money policies.In this article,some suggestions are come up with.We should upgrade industry structure, expand domestic demand,reform present international foreign reserves system and fasten the step of Renminbi Internationalization.