I saw two interesting pieces last week on the rise of the yuan. One said that the appreciation of the Chinese currency was hurting small businesses in China and increasing the mortality rate among small business start-ups (something VC people should be interested in). The other said, basically, that that was what needed to happen.

The first story, Chinese exporters struggle with rising yuan, was a Reuters piece published in the International Herald Tribune. According to Reuters, the Chinese currency has appreciated 4.5 percent against the US dollar in the last four months. They calculate that to be the equivalent of about 15% a year at the moment. But they admit that most analysts expect the 2008 total appreciation of the yuan to be between 8.5 percent and 10 percent - compared with 6.9 percent in 2007 and 3.4 percent in 2006.

In other words, the yuan renminbi is getting significantly stronger.

One impact of a stronger yuan has been reduced profits for export-oriented businesses, according to the Reuters piece.


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