Exchange Rates Lowered by Chinese Exporters

China is one of the world’s biggest exporters and a growing economy. But exporters in the country have stood up against the Chinese government and have unilaterally offered customers exchange rates that are lower than the office exchange rates in order to keep their businesses viable.

Exchange Rates Effect Trading
China is at the heart of factory production, generating a wealth of cheap Chinese goods for export. But exporters are concerned that world traders are turning their backs on cheap Chinese goods because of the strength of the yuan. And so exporters have taken things into their own hands by lowering exchange rates to keep business competitive.

Offering Lower Exchange Rates
Exporters and businessmen have complained that the exchange rates have impacted on profits. Speaking to the Telegraph newspaper, one such exporter Chen Ji said his export business struggled last year because of the unfavourable exchange rates. His trading fell by up to 50%. "The exchange rate is restricting us, even though the difference in our prices has not been great," he told the newspaper. "So we are offering our customers a lower exchange rate to the dollar, we offer 6.85 yuan to the dollar, or more, rather than the official rate of 6.75."

Exchange Rates: Dramatic Impact
The yuan has risen by almost 30% against the pound, which has had a dramatic impact on China’s exports. Some manufacturers have said that as a result, clients in the UK have cancelled their orders. Manufacturers and traders in China are willing to offer discounted exchange rates as their own manufacturing costs have dropped. The burst of the commodity bubble at the end of 2007 meant the cost of raw materials fell significantly. They have been able to offer lower exchange rates to offset the falling value of some foreign currency against the strengthening yuan.

Losing the Balance
Despite the move to try and keep Chinese export business healthy, critics say that lowering the exchange rates and encouraging cheap Chinese goods has a detrimental effect on Western countries – triggering job losses in their own manufacturing industries. China has been criticised for pouring too many goods into the global market and accused of behaving selfishly for profit rather than helping to rebalance the system.

Go Online for the Best Exchange Rate
If you are looking for the best exchange rates turn to Crowns Currency Exchange. We have some of the most competitive rates on the web, helping your money go further. Call us on 0800 612 7273 to find out how we can help. Alternatively send your emails using the online form provided.

Back to Currency Articles.