Foreign Exchange Rate Fluctuation
According to BIS, the real value of RMB appreciated 12.66% in 2008. The exchange rate of RMB to USD remained stable since last August, but to Euro, GBP and AUD witnessed at least 20% appreciation. This also restrained the demand from those regions.
Moreover, there is pressure from competitive countries. The currencies in Vietnam, India and Korea had a big depreciation to USD in last year. A large part of the demand from the U.S. and EU markets thus shifted to those countries. For example, the export of textile and garment from Vietnam to the U.S. grew 19.03% in 2008, but only 1.01% from China to the U.S.
Confidence is Key to Domestic Demand
The increase of domestic demand depends on the stable growth of per capita disposable income and customer??s confience.
Referring to the income, the nominal per capita disposable income for city residents increased 14.5% to last year. While the actual growth reached 8.4%. For rural residents, up 15%, with actual growth 8%. Referring to the consumption, the global financial crisis has little impact to the Chinese consumption. The total social consumable retail value reached 10,848.8 billion yuan, up 21.6% to previous year.
