Analysis of RMB Exchange Rate and Valuation of Export Enterprises Against the Backdrop of Record-High Trade Surplus

Summary of Core Conclusions

Can the RMB Exchange Rate Continue to Strengthen?

In the medium term, it tends to show “managed two-way fluctuations”; the basis for sustained unilateral appreciation or depreciation is not solid [0].
Trading perspective: USDCNH/USDCNY has fallen by about 1.7% cumulatively in the past 90 days, showing a “shock and weakening” pattern in the short term, but the central bank’s liquidity management in the offshore market (such as the proposed additional issuance of central bank bills) will still effectively curb unilateral movements [0].
Macro perspective: The high surplus growth more reflects the structure of “weak imports + entrepot and intermediate goods trade”; corporate profit retention overseas and capital account outflows hedge the capital account, so the exchange rate does not have sufficient and necessary conditions for sustained unilateral appreciation.

Impact on Valuation of Export-Oriented Enterprises?

Direct transmission:
RMB appreciation will weaken the price competitiveness of export products denominated in USD and other foreign currencies, dragging down revenue and profit margins; however, it forms a cost hedge for enterprises with large imports of raw materials or equipment.
Valuation sensitivity:
Enterprises with high export exposure (electronics, home appliances, automobiles, machinery, etc.) often face downward revisions in profit expectations and valuation pressure during RMB appreciation, but the differences depend on:
- Overseas revenue share and pricing power;
- Financial hedging (forward, option, natural hedging) strategies;
- Industry demand cycle and competitive landscape.
Current stage:
Under the combination of “deflation + weak demand”, even if export volume maintains high growth, it will take time for mid-stream manufacturing to recover bargaining power and profit margins; valuation improvement depends more on the resonance of domestic policies and global demand rather than单纯 exchange rate dividends.

I. Can the RMB Exchange Rate Continue to Strengthen?

1. Real-Time and Recent Situation Overview

Quotation:
USDCNH is about 7.00 (+0.05%), USDCNY is about 7.01 (-0.02%) [0].
Past 90 days:
USDCNH/USDCNY has fallen from about 7.12 to about 7.00, with a small range amplitude; the 20-day and 50-day moving averages tend to be flat, with a daily volatility of about 0.11% [0].
Technical pattern:
The price is close to the short-term moving average, indicating narrow-range consolidation. USDCNH has a slight discount relative to CNY, reflecting slightly stronger sentiment in the offshore market, but the central bank can guide CNH interest rates and fluctuations through offshore central bank bill issuance/recovery of liquidity to curb unilateral movements [0,1].

2. Central Bank Policies and Exchange Rate Formation Mechanism

China continues to implement a “managed floating exchange rate system based on market supply and demand, adjusted with reference to a basket of currencies”.
The toolbox includes central parity rate, counter-cyclical factor, foreign exchange deposit reserve ratio, macro-prudential parameters for cross-border financing, offshore central bank bills, etc., to smooth excessive fluctuations and prevent herding and speculation [1,2].
Around early 2025, market reports indicated that the central bank plans to issue additional offshore central bank bills to tighten CNH liquidity, push up CNH Hibor and volatility, and curb unilateral movements [1]. Such operations can effectively suppress short-selling and depreciation expectations at key points, but do not mean promoting sustained unilateral appreciation.

3. Macro Account Perspective: Surplus ≠ Inevitable Appreciation

Current account:
According to reports from the General Administration of Customs and multiple sources, the goods trade surplus exceeded $1 trillion in the first 11 months of 2024, hitting a record high [3,4]. However, the structure includes a large proportion of “intermediate goods and entrepot trade” and “processing export” replacing imports; the “net” contribution to the current account and employment pull is relatively weaker than traditional end-product exports [4].
Capital and financial account:
Under channels such as corporate profit retention overseas, outward direct investment, and securities investment, funds have not fully returned for settlement. At the same time, the domestic economy still faces deflationary pressure (low CPI, negative PPI), and weak domestic demand affects asset return and capital return expectations; capital outflow pressure exists periodically.
Policy trade-off:
If the RMB appreciates too quickly, it will抑制 export competitiveness and increase deflationary pressure; if it depreciates too quickly, it may amplify external debt burden and financial fluctuations. Therefore, the central bank prefers “two-way fluctuations and stability” rather than a unilateral direction.

4. Scenario Analysis (Next 6-12 Months)

Scenario	Trigger Conditions	Exchange Rate Direction	Key Risks and Reminders
Moderate appreciation/stronger shock	Fed easing/USD weakening, marginal improvement in domestic fiscal and real estate sectors, export resilience maintained, continuous offshore liquidity management	USDCNH moves toward the 6.8-6.9 range	Too fast appreciation will weaken exports and suppress deflation recovery; the central bank may increase counter-cyclical adjustments to curb unilateral movements
Range fluctuation, basically flat central level	No significant differentiation in Sino-US policies and fundamentals, stable external demand, moderate domestic recovery	USDCNH fluctuates slightly around 7.0	Most in line with “managed two-way fluctuations”; enterprises should respond with hedging and pricing strategies
Periodic depreciation pressure	Rising geopolitical/trade frictions, strong USD, intensified capital outflows, domestic demand recovery below expectations	USDCNH tests 7.2-7.3 again	The central bank can use tools such as foreign exchange deposit reserves and offshore central bank bills to smooth; if capital outflows continue, exchange rate flexibility increases

5. Conclusion

The high goods trade surplus provides “potential support” for the RMB, but capital and financial account outflows, domestic deflation and employment pressure weaken the macro basis for “sustained unilateral appreciation”.
Short term (1-3 months):
Dominated by narrow-range fluctuations under data disturbances and policy interventions, with no strong unilateral trend.
Medium term (6-12 months):
If domestic stable growth policies take effect and the Fed enters the interest rate cut cycle, the RMB is expected to strengthen moderately; otherwise, it will maintain range fluctuations or face periodic pressure.

II. Impact Mechanism on Valuation of Export-Oriented Enterprises

1. Transmission Channels

Revenue side:
Export orders are mostly denominated in USD; RMB appreciation will reduce the converted RMB revenue; whether enterprises can pass on costs through price increases or product structure upgrading depends on bargaining power and competitive landscape.
Cost side:
If enterprises rely on imports for raw materials/equipment, RMB appreciation is beneficial to reducing costs; at the same time, overseas revenue brings foreign currency assets, which play a natural hedging role.
Financial expenses and hedging:
Tools such as forwards, options, and swaps can lock in exchange rates; the higher the locking cost and the more sufficient the hedging coverage, the smaller the impact of exchange gains and losses on profits.
Valuation sensitivity:
Changes in market expectations for “exchange rate sensitivity” affect the target PE/DCF discount rate; in the appreciation environment, downward revisions in export chain profit expectations usually suppress valuation multiples.

2. Examples of Representative Companies (For Mechanism Illustration Only, Not Representative of the Entire Industry)

Midea Group (000333.SZ, Consumer Discretionary - Home Appliances):
Recent revenue and profits in 2025 maintain growth, ROE is about 20%, and gross profit margin and net profit margin are stable [0]. The company has mature global layout and hedging strategies, so short-term exchange rate fluctuations have controllable impacts. However, in the rapid RMB appreciation cycle, the pressure of converting foreign currency orders increases; it is necessary to closely track exchange rate exposure disclosure and overseas pricing strategies.
Gree Electric Appliances (000651.SZ, Consumer Discretionary - Home Appliances):
High profit quality and relatively cheap valuation [0]. If export share increases without sufficient hedging, appreciation will bring greater exchange gain and loss pressure; conversely, if domestic demand recovers or product category structure upgrades, it can partially hedge.
SAIC Motor (600104.SS, Consumer Discretionary - Automobiles):
Industry prosperity cycle is significantly affected by global demand, tariffs and policies; exchange rate is only one of the variables. Under the current intensified competition among global automakers and tariff uncertainty, the impact of short-term exchange rate fluctuations is relatively minor; long-term valuation depends more on new energy transformation and overseas localization production progress [0].

3. Industry Differences in Valuation Sensitivity

Industry	Export Exposure (General Characteristics)	Impact of Appreciation on Profitability	Impact on Valuation
Electronic manufacturing/semiconductor packaging	Medium to high, dependent on global orders	Revenue conversion damage, order price pressure	Valuation pressure; but if demand is strong, order premiums can still be obtained
Home appliances	Medium to high, global layout of brands and channels	Foreign currency revenue conversion pressure, need to pass on costs through price increases	Focus on brand premium and cost hedging capabilities
Automobiles	Medium, varying degrees of localization production	Depends on export proportion and localization proportion	More focus on product cycle and tariff policies
Construction machinery/building materials	Medium, some overseas projects	Foreign currency revenue conversion of projects, changes in financing costs	Related to global infrastructure cycle; exchange rate is a secondary variable
Textiles and clothing	High, high price sensitivity	Obvious impact on profit margins, lack of bargaining power	Valuation is highly sensitive to exchange rates; priority should be given to hedging

4. Key Judgments for the Current Stage

Demand side:
Global manufacturing and service industry prosperity are differentiated; European and American monetary policies enter the observation period; external demand uncertainty still exists.
Supply side:
Domestic deflation and enterprise profit recovery still take time; mid-stream manufacturing has limited bargaining power overall.
Policy and macro:
If fiscal and real estate stable growth policies exert significant force, it will improve domestic demand and capital return expectations, help stabilize the capital account and moderate appreciation of the exchange rate; if policy implementation is delayed, the pattern of “high surplus but capital outflow” continues, and the probability of unilateral appreciation of the exchange rate is low.

III. Response Strategies at the Enterprise Level

Exchange rate risk management:
Establish a sound system of “risk identification - exposure measurement - hedging execution - performance evaluation”; dynamically adjust forward, option and swap combinations according to export/import structure and cash flow characteristics.
Pricing and contract terms:
Add exchange rate adjustment clauses or multi-currency settlement options in contracts to moderately transfer exchange rate risks.
Natural hedging:
Establish localized production, warehousing and service centers in overseas markets to match revenue and cost currencies.
Financial transparency and communication:
Strengthen communication with the capital market on exchange rate exposure and hedging strategies to reduce uncertainty discounts.
Business upgrade:
Improve product technical content and brand premium to enhance bargaining power and reduce the impact of pure exchange rate fluctuations on profits.

IV. Summary and Recommendations

Exchange rate:
Against the backdrop of coexistence of high trade surplus and capital outflow, the RMB is more likely to show “managed two-way fluctuations” in the medium term rather than sustained unilateral appreciation. The policy toolbox is sufficient to intervene in extreme fluctuations [1,2].
Valuation of export enterprises:
Exchange rate fluctuations will affect the profits of export chain enterprises, but valuation pricing depends more on enterprises’ own export exposure, hedging capabilities, product structure and industry prosperity. Investors are advised to:
- Prioritize companies with “sound global layout, strong hedging capabilities, and high brand and technology premiums”;
- Remain cautious about companies with “high export share, weak bargaining power, and insufficient hedging”, especially pay attention to exchange gain and loss disclosure during RMB appreciation;
- Closely follow domestic stable growth policies and global demand cycles as more macro allocation coordinates.

References

[0] Jinling API Data (USDCNH/USDCNY quotes, historical market, CSI 50/CSI 300 indices, company fundamentals and financial indicators)
[1] Yahoo Finance (HK) — China’s Central Bank Plans to Issue Additional Offshore Central Bank Bills, Launching Media Offensive to Lift CNH Interest Rates and Stabilize Exchange Rate (2025-01-07)
[2] Investopedia — Why the Chinese Yuan Is Pegged to a Currency Basket (Currency basket and policy background)
[3] AP News/Yahoo Finance — China’s Trade Surplus Tops $1 Trillion as Its Exports Surge (Surplus and export growth in the first 11 months of 2024)
[4] WSJ — China’s Trade Surplus Exceeds $1 Trillion, Highlighting Its Export-Dominated Position (Description and discussion of surplus structure)

Analysis of RMB Exchange Rate and Valuation of Export Enterprises Against the Backdrop of Record-High Trade Surplus

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