Is the RMB rising strongly? Multiple factors are hitting the US consumer market

There have been many major events happening internationally in the past two days. Two major series of events are severely hitting the US domestic consumer market, namely oil production cuts and RMB internationalization. Many sellers have seen these news to some extent, but today I will help you sort out in detail their impact on the cross-border e-commerce industry.

Let’s first look at the oil production cuts. At the beginning of April, OPEC and non-OPEC oil-producing countries such as Russia collectively announced oil production cuts, with a total reduction of millions of barrels per day!

Production cuts mean higher crude oil prices, and this amount of production cuts is quite high. Institutions generally predict that crude oil prices may rise above $90 per barrel. In addition to the fact that domestic oil prices, which have finally dropped a little, are going to rise again, the rise in crude oil prices has a key indirect impact on our cross-border sellers, that is, domestic inflation in the United States is coming back.

Everyone knows that inflation in the United States will seriously affect consumers' willingness to consume. However, after the United States' crazy interest rate hikes last year, the inflation level was finally brought down from nearly 10% to 6%.

Thanks to the decline in inflation, the US consumer market has rebounded significantly at the beginning of this year. In February, US e-commerce sales increased by 13.2% year-on-year. It can be seen that inflation is closely related to cross-border sellers.

After understanding the above situation, let’s look at this picture again.

Compare it with the inflation trend chart and you can see what is going on. Yes, the inflation trend in the United States is highly correlated with crude oil prices. Gasoline accounts for a very high proportion of US consumer spending. A gasoline price increase means a price increase for bulk products, and also means a decline in consumer spending power for non-essential goods. Therefore, a reduction in oil production is very unfavorable for US site sellers.

Another thing is the internationalization of the RMB, which is a long-term process.

First, late last month, Russia announced that it would use RMB for settlement in trade with non-Chinese third-party countries. Then, at the end of March, Brazil announced that it would directly use RMB for settlement with China, eliminating the US dollar as an intermediate currency. Soon after, France also announced the first natural gas order between China and France settled in RMB. ASEAN also announced at the end of the month that it would promote settlement in its own currency to reduce its reliance on the US dollar.

A series of events all point to one goal: "internationalization of the RMB." Such drastic changes in a short period of time have made Europe and the United States call it an "economic blitzkrieg."

We won’t talk about the impact that is too high, let’s understand the impact of RMB internationalization on cross-border outbound. Why is the US dollar an international currency? Everyone uses the US dollar for transactions because the US dollar is anchored to oil. The importance of oil, the “black blood” in the industrial age, is not worth mentioning. It can be said that oil is the foundation of industry. If the RMB wants to be internationalized, it must also be anchored to something that everyone recognizes, which is a cheap, high-quality and complete industrial product.

As you can see, almost all the countries that are currently promoting RMB internationalization are resource exporters, such as Brazil, Russia, Iran, etc. From rockets, airplanes, and even space stations to nail clippers and lighters, RMB can buy almost everything they need, which is the basis for RMB internationalization. From a long-term perspective, this is the biggest benefit for domestic cross-border sellers, because it is the ultimate solution to the internal circulation of the domestic consumer market.

As we all know, China loves to fight price wars. The fundamental reason is that the domestic industrial capacity is too high, and the domestic demand has not been raised. The huge capacity has nowhere to be absorbed, and the only way is to fight price wars and lower prices . The internationalization of the RMB will gradually expand the consumer markets of major countries and open them to us. At that time, cross-border e-commerce will be an important channel for absorbing capacity. The wind is coming, and everyone must seize it.