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The exchange rate advantage of traditional manufacturing is so great because the exchange rate difference of comparable cost goods directly affects export profits. Taking China's manufacturing industry as an example, when the RMB appreciates, the exchange rate relative to foreign currencies increases, and the cost of export products will also increase, which will lead to a decrease or even a loss in the profits of export enterprises. On the contrary, when the renminbi depreciates, exporters can export products at a lower cost and obtain higher profits. Therefore, keeping the exchange rate of the national currency low, or even taking the initiative to depreciate foreign exchange, is a common strategy for traditional manufacturing countries to pursue international competitive advantages and expand the scale of exports.
However, the market rules for conceptual products are different from those of traditional manufacturing. The cost of a conceptual product is not comparable, because consumers' decisions to buy a product are more based on the quality, style, and personal preference of the product, rather than just the cost. In the field of conceptual products, such as movies and high-tech products, import and export decisions are more focused on the popularity of the product and the technical solution, and are not directly affected by the exchange rate.
The market characteristics of the concept product determine that the exchange rate is not the decisive factor for import and export. For example, the production and completion of luxury goods, electronics, medicines, medical equipment, and other products can all take place in China, just by sticking a foreign brand. In this case, imports are not related to the cost of production, but to the brand and product quality. In addition, the ** of highly composite products such as chips is also affected by a variety of factors, and cost is only one part of it. By lowering the selling price, manufacturers can reduce inventory overhang and improve market competitiveness.
The path of sustained appreciation of the renminbi is constrained by the differences in economic structure between China and the United States. From the perspective of traditional manufacturing, the appreciation of the renminbi will lead to a decrease in the profits of exporting enterprises and a decline in export volume. However, in the field of conceptual products, the appreciation of the renminbi does not directly affect the decision-making factor of imports and exports. Although the appreciation of the renminbi can make the import of concept products relatively low, this does not mean that the import volume of concept products will increase significantly. Because the purchase of conceptual products depends more on non-economic factors such as quality, style and consumer preferences.
The difference in the economic structure of China and the United States is also an important factor in the path of RMB appreciation. China is still dominated by traditional manufacturing, while the U.S. economy is more inclined towards conceptual products and technology industries. This difference has led to a large gap between the two countries in terms of economic development and market size. Therefore, although the appreciation of the renminbi may bring difficulties to traditional manufacturing countries, for a large manufacturing country like China, more attention should be paid to upgrading the industrial structure and increasing innovation to adapt to the new situation of international economic competition.
The continued appreciation of the renminbi is affected by the differences in the economic structure of China and the United States. The exchange rate advantage of traditional manufacturing products still exists, but in the field of concept products, the exchange rate is no longer the main factor in import and export decisions. As a major manufacturing country, China should strengthen its industrial upgrading and innovation capabilities to adapt to changes in the global economy. Only by reforming and innovating and improving product quality and technical content can we truly solve the challenges brought by exchange rate fluctuations to economic development and gain competitive advantages in the global market.
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