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China's Hold On Undervalued Yuan Is Good News For Bulk Vending

Posted On: 3/18/2011

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bulk vending, vending machine, vending machine business, vending industry, vending supplies, bulk vending supplies, bulk vending merchandise, Wen Jiabao, China currency, China trade

BEIJING -- Prime Minister Wen Jiabao defended China's currency and trade policies against what he described as foreign "finger pointing." Wen said that developed countries seek to force unfair changes in those policies "just for the purposes of increasing their own exports." During a news conference on March 14, he made it clear that there are no immediate plans for allowing China's currency rise in value against the U.S. dollar.

"The appreciation of the Chinese currency should be a gradual process, because we must bear in mind its impact on Chinese businesses and our employment situation," Wen said during the annual session of China's Legislature.

This is good news for the bulk vending industry, which depends on steady supplies of inexpensive products from China. Any rise in the value of the yuan against the dollar could boost prices and erode profit margins for operators.

However, faced with increased pressures from trading partners abroad and inflation at home, it is uncertain how much longer China can keep the yuan undervalued. Prices in China on average rose 4.9% in February; food prices jumped 11%.

By some accounts, China's currency is undervalued between 25% and 40%. In recent years, Chinese authorities have brushed off U.S. policymakers' threats of sanctions in the form of tariffs to level the playing field. But now the Chinese government is now faced with domestic pressure to allow the yuan to increase in value.