The renminbi appreciation has caused the gear industry deficit to soar 5 times

On June 17, 2008, the central parity of the RMB against the US dollar broke 6.9 for the first time to 6.8919. Since the exchange rate reform in 2005, the appreciation of the renminbi against the US dollar has exceeded 20% for the first time, reaching 20.09%. The rapid appreciation of the renminbi and the deterioration of the external environment have put tremendous pressure on the exports of Chinese enterprises.

In the past year of 2007, the accumulative rate of appreciation of the renminbi reached 6.9%; however, the foreign trade of the machinery industry does not seem to have been greatly affected. Statistics show that from January to December last year, the machinery industry achieved a cumulative export of US$192.915 billion, a year-on-year increase of 40.9%; a cumulative import of US$168.774 billion, a year-on-year increase of 20.84%; a trade surplus of US$24.141 billion. The export growth rate of most industries is above 30%.

However, the gear industry is an exception. According to data released by the China Gear Professional Association, in 2007, gear product exports were 1.194 billion US dollars, down 54% year-on-year; imports were 5.062 billion US dollars, an increase of 50.2% year-on-year; the trade deficit reached 3.868 billion US dollars, about five times that of 2006. Although the foreign trade of gear products has been in deficit in recent years, such a surge is beyond most people's expectations; especially in 2007, when the import and export of mechanical basic parts products first achieved a surplus, the data on gears became even more eye-catching.

Why did gear products experience a sharp decline in exports and a substantial increase in imports in 2007?

The industry believes that the rapid appreciation of the renminbi is the main reason. The current situation of my country's gear industry is that low-end products have overcapacity and fierce competition, while high-end products mostly rely on imports and are controlled by others. Almost all gear products imported in 2007 were high-end products, of which automatic transmissions reached US$2.65 billion, accounting for 52.4% of the total imports. With the continuous upgrading and continuous development of my country's automobile, construction machinery and other industries, coupled with the boom in wind power, nuclear power and other fields, the market has an increasing demand for high-end gear products. The appreciation of the renminbi has depressed import prices, thus promoting rapid import growth. On the other hand, those low-end products with low technical content and \"winning by price\" are unable to withstand the pressure brought by the appreciation of the renminbi because they do not have enough profit margins. Once the RMB appreciates too fast, it is difficult for enterprises to digest it, and the shrinking of exports becomes inevitable.

But in the view of Wang Shengtang, secretary general of the China Gear Professional Association, the deeper reasons are the problems of the industry itself: weak innovation capabilities, backward technology, low product quality, and so on. He pointed out that problems such as the appreciation of the renminbi, rising raw material prices, rising labor costs, and increasing environmental protection costs will still exist in the future. There is only one fundamental way to resolve these pressures, and that is to \"practice internal strength\". At present, the Dental Association has proposed an industry development strategy of \"mainly focusing on high-end, maintaining mid-end, and reducing low-end\", \"improving the R&D and innovation capabilities of enterprises, improving the product level of the entire industry, breaking through high-end product technology, and moving from a big gear country to gear Strengthening the country is an important task and direction for the entire gear industry in the future. \"Wang Shengtang said.