The yuan has been depreciating continuously since mid-2015, weakening to a six-year low on Monday. Several domestic cross-border traders interviewed by the Global Times said that the depreciating yuan has helped boost their export volume, but only to a limited extent. Experts said that although currency is a tool to stimulate exports or imports, it does not play an ultimately decisive role, as slack international demand is exerting great pressure on domestic trade.
Chen Huiping, a cross-border trader based in Yiwu, East China's Zhejiang Province, found that his company's volume of exports has skyrocketed by about 10 times year-on-year in the first eight months in 2016. Meanwhile, his company's sales revenues also increased by about 30 percent.
"I would say that the yuan's currency fluctuations in recent months have been a factor behind the situation," Chen said.
Chen, executive vice president of Zhejiang Ptarmigan Supply Chain Management Co, has been in the business of cross-border trade, mostly exports, for dozens of years. His company exports products like clothes, daily articles and accessories to a number of countries including India, Columbia, the Philippines and Poland. Customers in most of those countries settle trade in US dollars, but some also use euros to pay their bills.
For Chen, it's good news that the yuan has entered a downward spiral against the dollar since mid-2015.
"I would not say that the yuan's depreciation has a very big influence on our business. But it certainly is a benefit to us," he told the Global Times on Monday.
But Chen also said that he was not sure about the exact amount of earnings that the recent currency fluctuations have brought him.
On Monday, the yuan weakened to a six-year low against the dollar, with the currency's reference rate dropping to 6.7379. On Wednesday, the reference rate stayed at 6.7326.
The yuan's exchange rate was about 6.38 against the US dollar by the end of August 2015, data from finance.sina.com.cn showed.
Dong Dengxin, director of the Finance and Securities Institute at Wuhan University of Science and Technology, said that the yuan's reference rate had been falling for seven consecutive trading days as of October 13, sending out a signal that the yuan will continue its unilateral fall in the short term.
Afterward, the yuan fluctuated. It climbed a bit on Friday, dropped to a six-year low on Monday, climbed slightly Tuesday and depreciated again Wednesday.
He predicted that the yuan would drop to 6.8 against the dollar in the medium and short term.
On the other hand, Dong cautioned that, judging from official data, China's trade situation is still mired in sluggishness.
"With slack international demand, the exchange rate will hardly be a life-saver for exports," he said.
Little influence
Dong explained that, in most cases, when the value of the yuan is down against a currency, it would be cheaper for other countries to source commodities from China, thus helping Chinese exporters expand their market share overseas.
Besides, an appreciating currency in an overseas market would offer Chinese exporter an added margin when they convert the money paid by the overseas clients into the yuan, Dong explained.
Overall, he said, "in most cases, a depreciating currency is beneficial to exports, while an appreciating currency is good for importing."
He nevertheless stressed that such a rule is not applicable everywhere.
"The influence of currency fluctuations is mostly obvious on traders who export cheap products with relatively low added value and those who are highly dependent upon the overseas markets," Dong said.
Chen, for example, has suffered before at the hands of currency changes.
"From 2013 to 2015, the yuan appreciated a great deal against the euro, which brought hundreds of millions of yuan's losses to my business, and I had to sell some of the company's assets to pull through," he said.
The yuan's exchange rate against the euro fell to about 6.96 by the end of April 2015, from 8.26 at the end of July 2014, according to the finance.sina.com.cn.
But Chen stressed that the yuan's fluctuations against the US dollar in recent months has had little impact on his business, as the fluctuation range has been relatively mild.
He also noted that he would shift his priorities to his importing business if the yuan appreciates in the future.
Chen Hui, CEO of the Ningbo Shindak Imp & Exp Co, a trade company based in Ningbo, Zhejiang Province, that exports kitchen supplies and daily necessities to countries like Germany and the US, also said that although the depreciating yuan can generate "windfalls" for his business, they are almost "negligible" compared with the rising costs in his company.
"We don't care that much about the currency fluctuations," he said, adding that some overseas clients would also demand price adjustments in line with currency changes.
"Overseas clients don't decide the size of their orders based on currency rate. Their market demand is on the top of their priority list," Chen, the CEO from Ningbo, told the Global Times on Wednesday.
Dong also stressed that companies can offset the potential influence from the currency fluctuations by turning to alternative markets and by exporting products with higher added value.
Li Erqiao, general manager of Soton Daily Necessities Co, a drinking straw company also based in Yiwu, said that his company has greatly reduced the proportion of overseas trade in its overall business in recent years.
"Exports accounted for more than 90 percent of our business in 2003. Now it only accounts for about 28 percent. We attach more importance to the domestic market now," he said, adding that this would significantly reduce the influence from currency changes.
He also said that his company's trade partners have shifted from countries in the Middle East and Africa to Germany and Japan.
"In the past, our trading partners cared a lot about price. But now, the new partners think that quality is more important than price, and they wouldn't abandon cooperation with us easily for reasons like currency fluctuations," he said.
Sluggish trade
According to Dong, although the depreciating yuan should theoretically help lift exports, the reality is that it can't save the country's declining exports out of sluggishness.
Statistics released by the General Administration of Customs on October 13 showed that exports fell by 7.5 percent year-on-year from January to September, to about $1.5 trillion.
Tu Xinquan, deputy dean at the China Institute for WTO Studies at the Beijing-based University of International Business and Economics, said that sluggish international demand has been a major reason for the situation.
"Even if the currency rate provides a privilege, it cannot make up for the fact that our products have few places to go to," Tu told the Global Times on Monday.
Dong also said that the international foreign currency market has been in chaos in recent months, with many countries competing to depreciate their currencies.
"This has disrupted the financial order on the international markets, and has also weakened the influence of the weakening yuan on overseas trade," Dong said.
