If renminbi appreciates by 3 percent, Chinese manufacturers of household appliances, vehicles and cell phones will see a profit decrease of 30 to 50 percent, and some small and medium-sized enterprises may face losses, Economic Information Daily reported Friday, citing test results.
China conducted a round of stress tests in late March to see how much yuan appreciation domestic and foreign labor-intensive companies in Shanghai and the provinces of Guangdong, Zhejiang and Jiangsu could withstand.
Yuan appreciation will erode profits for exporters, according to test results compiled by import-export trade associations of mechanical and electrical, light and textile industries.
Excessive yuan appreciation may also intensify China's industry structural problems, rather than give a hand to industry optimization and upgrade, the report said, citing economist Lu Zhengwei with Industrial Bank Co Ltd. Industry structure improvement takes a long time to complete, he added.
However, some experts called for not magnifying the impact of yuan appreciation. China's exports were mainly determined by external demand, not the fluctuations of foreign exchange rates, said Zhang Ming, a researcher with the China Academy of Social Sciences.
Chinese exporting enterprises have the ability to offset the yuan appreciation impact through price adjustments, said Zhao Qingming, senior researcher with China Construction Bank.
