China’s export-oriented shipping industry is confronting with the shock of the renminbi appreciation now.
In April, the central parity rate for the U.S. dollar broke seven for the first time has posed a strong signal to explicitly aware of the appreciation of China’s currency. According to experts’ calculation, versus one dollar converted into 8.2765 renminbi before the exchange adjustment on July 21, 2005, the accumulated appreciation of China’s currency has mounted up around 15.5 percent and the rate of exchange between the two currencies stepped into a speed-up period since the year of 2007, what is more, the tendency is increase rather than decrease.
As a matter of fact, earlier last year, our national management dogs of shipping industry once denoted that reckon in terms of existing-handed orders value, the more one percent rises, the more loss of exchange estimated at nearly 2 billion yuan happens. If counted on the current orders value, the loss will be even more.
Statistics released by China Customs shows, in 2007, the export value of China’s shipping products amounted to $12.24 billion dollars, up 51 percent from the year of 2007. If in terms of this percentage, our country would loss far more than 2 billion yuan as one percent rise of renminbi. It is worth noticing that the national related institution has set the expected value of exported shipping products at $16 billion dollars, which meant to much more losses once the renminbi continuous appreciated.
As seen from Dalian Shipbuilding Industry Co., Ltd, in 2005-before renminbi revaluation, the company’s handed orders valued at $3.9 billion dollars, if in terms of the new rate, the company had to bear an accumulated loss of 3.3 billion yuan.
The problem is the U.S. dollar as settlement is still a common way at present; maybe, a way cannot be changed in the predictable future. An expert with China Shipbuilding Science Center denoted that some foreign shipping enterprises adopted the euros or yen settlement, though, the currencies cannot work well for not having received recognition in international market.
“Therefore, policy is now very urgent to give a support to the shipping enterprises. Basically, the enterprises should improve the core competitiveness by self-innovations.” The expert said.
Practically, the renminbi appreciation against the U.S. dollar has created unfavorable effects on shipping products in export-oriented countries. Japan and Europe shipping industry insiders also expressed their concern about the dollar depreciation, especially for the Japanese shipping industry that just showed some improvements.
Same pressures fell upon China’s shipping industry.“Apart from companies’ shrinking profits, the renminbi appreciation would have some influence on the existing or even the future competitiveness of the national shipping enterprises. Some new challenges may be posed to the comprehensive competitiveness against the soaring production capacities in global shipping market.” The insiders analyzed.
On the occasion of the renminbi appreciation, surging price of steel products and raw materials can be the major risks of shipping enterprises for the time being.
“We should have an aware of the current stage—China’s shipping industry is transferring from the large to the strong, and is also a stage full of risks. China is due to witness this experience to be a stronger, and clearly, our national shipping industry cannot stop the rapid development even though the currency appreciation." The expert said.