China RMB Appreciation Affects U.S. Decision Makers 8/5/2010

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In late June, the People’s Bank of China made the decision to allow the Renminbi, or the Yuan, to once again appreciate against the US Dollar, after nearly a two-year freeze period. As world economic conditions slowly begin to improve and pressure from trading partners mount, Beijing is allowing for a more flexible exchange rate.

Beijing’s decision could possibly lead to increases in labor and production costs and has left some US companies uncomfortable with future China investments. Fortunately, historical data and perspectives from industry experts prove otherwise.

China still boasts an extraordinarily large low-wage labor pool, robust infrastructure, extensive investment incentives and preferential tax policies to encourage continued foreign investment. China will remain on the forefront for quite some time.