Research on RMB Depreciation and Its Impact on Chinese Corporate and Society

Abstract

Raising interest rates by the Federal Reserve forces global capital flows to the US market, which in turn causes other countries economic growth to slow or currency to depreciate. China has been inevitably affected by the Feds higher interest rates, which have led to the devaluation of the RMB and have had a negative impact on the normal operation of Chinese corporations and society. Therefore, this paper analyzes the impact of RMB depreciation caused by the Federal Reserve interest rate hike on China through literature review and case analysis. Through research, the Federal Reserve adopted the policy of interest rate increases to force the Chinese government to tighten its internal monetary policy while continuing to promote the internationalization of the RMB, which in turn caused the depreciation of the RMB. Export-oriented enterprises can avoid interest rate risk caused by RMB depreciation through financial means, and the overall advantages outweigh the disadvantages. However, the depreciation of the RMB has increased the costs of cross-border e-commerce, Chinese tourists traveling overseas, and studying abroad, and the overall disadvantages outweigh the advantages.