Manufacturing Empire in the Valley

Chapter 1366 The Renminbi Will Depreciate

Wu Ping likes to discuss problems with Niu Xiaoqiang the most, because Niu Xiaoqiang can always solve problems in the process of discussion.She smiled coquettishly and said: "Every time I talk about things with you, my sister always feels very relaxed, because my sister knows that no matter what problems you encounter, you can think of the most appropriate solution. Regarding the problem of garbage disposal, my sister listens to you." Yours, do it according to your opinion."

Niu Xiaoqiang smiled, and then changed the subject: "Sister Ping, my master can lend money to the district, but the loan interest rate must be made clear in advance. What do you think about this?"

Wu Ping replied with a smile: "Just calculate the interest according to the bank's benchmark interest rate. I will draw up the contract at that time, and it will take effect after signing."

Niu Xiaoqiang asked: "The benchmark interest rate you mentioned refers to the deposit rate of residents?"

Wu Ping nodded: "Of course, otherwise, what interest rate do you want to calculate?"

Niu Xiaoqiang originally wanted to calculate according to the bank's loan interest rate, because the loan interest rate is much higher than the deposit interest rate.The deposit interest rate is only two or three percentage points at most, but the loan interest rate generally exceeds eight percentage points, and some even exceed ten percentage points.It can be seen that the difference between the two is still very large.

At this moment, when he heard that Wu Ping was going to pay interest according to the deposit rate, Niu Xiaoqiang immediately felt that he had suffered a big loss.But remembering that this loan is actually laying the foundation for his future development in advance, Niu Xiaoqiang didn't worry too much about the interest rate issue.

He is not short of money now, and he doesn't value hundreds of thousands of interest as much as before.Having said that, Niu Xiaoqiang was still going to remind Wu Ping: "Sister Ping, what I lent you is US dollars. When you repay the principal and interest, you must pay in US dollars. You must not forget this."

Hearing this, Wu Ping was a little bit annoyed: "Xiaoqiang, are you a little bit of a forceful person? You know the current domestic situation. It can be said that there is no obstacle at all to convert dollars into renminbi, but if you want to convert renminbi into dollars , that means there are many difficulties, so don't make things difficult for my sister, okay?"

If it is an ordinary enterprise, it will definitely hold the dollar tightly in its hands.This is because the U.S. dollar is a hard currency and can directly purchase materials in the international market.

The renminbi is no good, and it has no status at all in the international market.If you need to buy foreign materials, you can only go to the foreign exchange management department with RMB, and ask your grandpa to tell your grandma to let them convert the RMB into US dollars for you. It is difficult for people who have not experienced it to understand. .

Niu Xiaoqiang was different. He had much more US dollars than RMB. Moreover, his companies in the United States had good performance, and there was no shortage of US dollars. Therefore, Niu Xiaoqiang did not refuse Wu Ping's plea.However, he also put forward his own request: "Sister Ping, I can promise you to repay the loan in RMB, but I also have my own request to wait until the loan period ends, and the repayment in the district must be based on the real-time exchange rate between the US dollar and RMB. Do the calculations, do you think it will work?"

Without even thinking about it, Wu Ping immediately nodded and agreed: "No problem, I can write this clause into the contract, you can rest assured."

Wu Ping didn't know how much burden her words had caused to the district's finances, but Niu Xiaoqiang knew it all.

According to Niu Xiaoqiang's speculation, the RMB will definitely depreciate in the near future, and the depreciation rate is still a bit large.This is because with the continuous deepening of reform and opening up, the country's economy will completely transform from a state-led planned economy to a free economy dominated by foreign investment.

The reason why many foreign businessmen come to China to invest and build factories is mainly because of cheap domestic labor costs and preferential tax policies. They rely on these two advantages to produce in China and then export their products to other markets for sale. earn very high profits.

Take the United States as an example, the annual income of ordinary American workers is about 400 US dollars, but in China, the annual income of ordinary workers is only [-] yuan.Even without considering the exchange rate factor, simply comparing these two figures, you can see how low the labor cost in China is.

If a company has 500 workers and it manufactures in the United States, the annual wage bill alone will be as high as $900 million.

But once this company relocates its production base to China, its annual salary expenditure will only be a few hundred thousand RMB. After all this, the saved wages alone can greatly increase the profit of this company Rate.

If the preferential tax policies offered by China are added, the company will earn even more money.

This is the main reason why so many foreign businessmen are willing to invest and build factories in China.

The reason why Niu Xiaoqiang predicted that the RMB will depreciate sharply in the near future is because as more and more foreign businessmen come to invest in the country, China will soon become dependent on export trade.

People in China are generally short of living materials, but because everyone is not very rich, their purchasing power is very limited.Foreign businessmen have their own international sales channels, and some of the products they produce can be sold in China nearby, but more products still have to be digested by relatively rich countries.

In this way, the country's export trade will show a leapfrog growth situation. The country needs foreign businessmen to provide jobs for the people, and also needs tax revenue from export trade to increase fiscal revenue. Therefore, from the perspective of the most conducive to economic development, The country must consider the situation of export trade.

In order to maintain the good growth momentum of export trade, and attract more foreign businessmen to invest in China, so as to invigorate the domestic economy better and faster, the most sensible approach for the government at this time is to depreciate the domestic currency.

Once a country's currency depreciates, it will be very beneficial to exports. This is because only the domestic currency is depreciated, and the US dollar, the internationally accepted benchmark currency, is not affected.You use domestically cheaper goods to export, but what you earn is US dollars, so your profit margin will increase significantly.

For example, if the export price of a piece of clothing produced in China is 25 US dollars, this piece of clothing is equivalent to 50.00 yuan in RMB at the current exchange rate.Once the RMB depreciates by 50%, the export price of this garment is still ten dollars, but its RMB price has doubled, up to [-] RMB.If you settle in your home currency, your profits will be doubled.This is the benefit of currency depreciation for export trade.

(End of this chapter)