Evaluation Framework for the Impact of RMB Appreciation on Export-Oriented Industries in A-Shares and USD-Denominated Performance

• Current phase: Offshore USD/CNY is around 7.00, onshore RMB exchange rate fluctuates near the 7.0 mark, offshore once broke above 7.0—making the RMB the strongest since May 2023 [0].
• Year-to-date trend: The RMB has appreciated significantly since 2025. According to brokerage API data:
  • Around 7.33 at the start of the year, ~6.996 at the end of the year; the lowest was 6.9943 and highest was 7.4243 during the year, representing an RMB appreciation of ~4.56% [0].
• Market environment: This round of appreciation is jointly driven by a weaker USD, expanding China’s trade surplus, and rising year-end settlement demand [1][2][3].

Chart: 2025 RMB Exchange Rate vs. Price Performance of Major Export Enterprises [0]

• A stronger local currency weakens export price advantages (foreign currency-denominated prices become relatively more expensive).
• Impact degree depends on: product price elasticity, bargaining power, competitors, and tariff/exchange rate environment (e.g., coexistence of high tariffs in Europe/US and opportunities in emerging markets).
• Evaluation key points:
  • Revenue share and growth trend in major markets (Europe, US, and emerging markets).
  • Whether there is brand premium or strong technical barriers (can pass on/partially pass on the impact).

• Enterprises relying on imported raw materials, equipment, or components: RMB appreciation reduces import costs, hedging part of the exchange pressure.
• Evaluation key points:
  • Weight of key imported products and procurement currency structure (USD/EUR, etc.).
  • Procurement cycle and inventory strategy, transmission rhythm of exchange rate fluctuations.

• USD and other foreign currency asset/liability exposure determines the direction of exchange gains/losses.
  • USD liabilities (overseas bonds, etc.): RMB appreciation reduces the local currency repayment cost of foreign debts, forming an accounting benefit.
  • USD assets (overseas receivables/cash): RMB appreciation shrinks the local currency value, forming accounting pressure.
• Evaluation key points:
  • Scale and currency structure of foreign currency monetary items.
  • Hedging coverage rate and tool selection (forward foreign exchange settlement/sale, foreign exchange options, etc.).
  • Hedging cost and effectiveness monitoring (mark-to-market and rolling hedging).

• Profit margin impact: Exchange rate fluctuations erode profits or optimize costs—need to combine marginal changes in gross margin and sales expense ratio.
• Market share: Whether to hedge price pressure through product upgrades, channel deepening, and localization in a strong local currency environment.
• Capital expenditure and technology investment: Whether exchange rate fluctuations change the pace of overseas mergers/acquisitions and capacity expansion.

• Revenue side: High sensitivity to exchange rates; but leading companies with brand premium and deep channels can buffer through price increases or product structure optimization.
• Cost side: Some key components are imported—RMB appreciation reduces part of the costs.
• Financial side: Global layout and diversified settlement currencies help smooth the impact.
• Evaluation levers: Export share, product iteration capability, overseas localized production and settlement currency structure.

• Revenue side: Strong demand in emerging markets (e.g., new energy vehicle exports increased by 87% YoY in November, with significant volume in emerging markets like Mexico [6]), but high tariffs in Europe/US form structural constraints.
• Cost side: Raw materials and core components have a large import share—RMB appreciation can hedge part of the costs.
• Financial side: Overseas factory construction and localized production weaken terminal price sensitivity to exchange rates; hedging strategies are crucial.
• Evaluation levers: Overseas capacity and localization rate, export destination structure, hedging coverage and cycle.

• Revenue side: High price elasticity and limited bargaining space—exchange rate fluctuations have a more direct impact on gross margin and orders.
• Cost side: Medium import share of raw materials—limited cost hedging space.
• Financial side: Small/medium-sized entities have insufficient hedging willingness and tool availability.
• Evaluation levers: Sensitivity test of gross margin to exchange rate changes, customer concentration and negotiation ability for settlement currencies.

• Focus on revenue by region (including export share and growth) and quarterly changes in gross margin.
• Signal: If export sales grow rapidly but gross margin is under pressure, it may relate to the combination of RMB appreciation and tariffs/price competition.

• Focus on the scale and direction of “Financial Expenses – Exchange Differences” or “Fair Value Changes – Foreign Currency Items”.
• Signal: Frequent and large exchange fluctuations reflect insufficient exposure management or need for hedging strategy optimization.

• Focus on the disclosure of “foreign currency monetary items” (monetary funds, receivables/payables, loans, etc.).
• Signal: Excessively high USD liabilities are beneficial in the appreciation cycle, but be alert to reversal risks in the future.

• Focus on operating cash flow and overseas sales collection cycle, as well as changes in overseas orders and handheld projects.
• Signal: Extended account periods combined with rising exchange losses suggest the need to rebalance settlement currencies and hedging.

• Balance sheet translation: Overseas assets/liabilities are translated at the end-of-period exchange rate—exchange rate changes affect net assets and consolidated statement scale.
• Income statement translation: Overseas business revenue/expenses are translated at the average exchange rate—exchange rate changes affect consolidated profit margin and growth rate.
• Evaluation key points:
  • Share of overseas business revenue and profit and their translation sensitivity.
  • Whether to reduce translation fluctuations through natural hedging (matching of overseas expenses and revenue currencies).

• Export resilience: China’s trade surplus exceeded 1 trillion USD in the first 11 months of 2025, providing support for the exchange rate [2][4].
• New drivers: High value-added exports like new energy vehicles grew rapidly (up 87% YoY in November) [6], hedging part of the pressure on traditional goods.
• Policy and hedging environment: Regulators emphasize enhancing the resilience of the foreign exchange market and preventing overshooting [3]; availability of tools like forward foreign exchange settlement/sale and options has improved, but hedging rates of some enterprises are still low (about 20%) [2].

• Risk of unilateral appreciation turning to bilateral: If the RMB turns to two-way fluctuations, unhedged USD asset exposures will face reverse pressure.
• High tariffs and compliance in Europe/US: Incremental emerging markets cannot fully offset barriers in developed markets—need to layout localization and compliance in advance.
• Interest rate spread and swap cost: Deep negative USD/CNH swap pushes up hedging costs—need to rolling evaluate hedging efficiency and term structure [2].
• Recommended strategies:
  • Establish a “risk-neutral” foreign exchange management framework (define acceptable exchange gain/loss range).
  • Adopt layered hedging: Use forwards/options for short-term, natural hedging and localized capacity for medium-term.
  • Dynamic monitoring: Conduct regular stress tests on exchange rate sensitivity in revenue, cost, and financial expenses.

1. Exposure and Structure Inventory

   • Sort out the currency, term, and scale of foreign currency monetary items (assets/liabilities).
   • Distinguish between operating exposure (receivables/payables) and financial exposure (debt/deposits/derivatives).

2. Scenario Calculation

   • Set exchange rate scenarios (e.g., ±5%, ±10%), calculate the marginal impact on EBIT, net profit, and net assets.
   • Identify “impact amplification points” (low gross margin categories, high concentration in a single market, low hedging coverage).

3. Hedging Review and Optimization

   • Review hedging tools and execution effects in the past 1-3 years, evaluate cost and effectiveness.
   • Dynamically adjust hedging ratio and term according to business rhythm and seasonality (e.g., order and collection cycle).

4. Disclosure and Governance

   • Clearly disclose foreign currency exposure, hedging strategy, and exchange impact in financial reports to enhance transparency.
   • Establish an exchange rate risk management committee and early warning thresholds—integrate exchange rate variables into business plans and budgets.

• Gilin API Data (real-time and historical market data, correlation analysis results, etc.) [0]
• Yahoo Finance (Bloomberg). What is the impact of RMB breaking 7? How will the future go? [1] https://hk.finance.yahoo.com/news/
• Bloomberg (Yahoo Finance). RMB appreciation rhythm becomes a stabilizer in turbulent environment [2] https://hk.finance.yahoo.com/news/
• Yahoo Finance. Offshore RMB once broke above 7 yuan mark—appreciation rhythm accelerated before the end of the year [3] https://hk.finance.yahoo.com/news/
• Bloomberg. China EV Exports Worldwide Rise 87% Y/y to 199,836 in November [6] https://www.bloomberg.com/news/articles/2025-12-29/china-ev-exports-worldwide-rise-87-y-y-to-199-836-in-november