How to survive the war between RMB and USD?

Cheming Yang

On October 11th, the US senate passed the so called China currency bill that calls for retaliatory trade measures against countries that maintain an undervalued currency. The House of Representatives are still considering this bill and the White House is not supportive of this measure in fear of a trade war.

Recent environmental concerns over the pollutions emitted by the electronic manufacturers in China have spurred a poisonous apple conspiracy theory. The attacks focused on the suppliers of the Apple Inc. The iPs no doubt use up a lot of electronic parts made in China and allegedly those parts are not environmental friendly manufactured. However, the concerns were published extensively in the news media at this very sensitive moment and was said to be the heralds of the war between RMB and USD, which left a lot of enterprises ponder how to avoid getting caught in between.

At the age of globalization, the world is flat. When the world is flat, we can see more fluidity and liquidity in all production elements. Capital can flow easily and people in theory can move easily as well. The value of one currency will cut both ways for all trading partners. China will suffer from the appreciation of RMB for sure, but will also benefit from it. The same is true for the US as well. As such, it is not in the best interests of both sides to push for a war in currencies, at best quarrel perhaps.

Undoubtedly the value of RMB will continue to go up in light of the above world average economic growth and the trade between China and US will continue as usual with some speed bumps. Enterprises may have to adjust their paces accordingly. But in the end, the strength of each enterprise still lies in its core competency and uniqueness of products. How to survive this quarrel between RMB and USD? World class products and services regardless whether they are valued in the unit of RMB or in the unit of USD.


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