Core Viewpoint - The article discusses the importance of international trade pricing power and how enhancing the pricing power of the Renminbi (RMB) can reduce exchange rate risks for Chinese economic entities. It emphasizes the need for China to leverage its manufacturing advantages and adapt to changing global economic conditions to increase the RMB's role in international trade pricing [3][5]. Group 1: International Trade Pricing Power - International trade pricing power is a rule-making authority that determines who bears the exchange rate risk in trade. Enhancing this power can lower the risks faced by domestic economic entities [3]. - The choice of pricing currency in international trade is influenced by three main factors: upstream intermediates, downstream competitors, and transaction costs. The dominant currency pricing (DCP) is a significant aspect of vehicle currency pricing (VCP) [4][14]. - The current international macroeconomic environment presents opportunities for enhancing RMB pricing power, which requires appropriate policy responses [5][12]. Group 2: Factors Influencing Pricing Currency Choice - The choice of pricing currency in international trade is determined by the interplay of upstream intermediates, downstream competitors, and transaction costs. This framework helps understand the dynamics of currency selection [14][21]. - Upstream intermediates influence the choice between producer currency pricing (PCP) and VCP. A complete domestic supply chain increases the likelihood of using PCP [18]. - Downstream competitors affect the choice between local currency pricing (LCP) and VCP. In competitive markets, firms are likely to adopt the same currency as their competitors to avoid price volatility [19][20]. Group 3: Enhancing RMB Pricing Power - To enhance RMB pricing power, China should focus on increasing PCP by leveraging its manufacturing advantages and expanding its supply chain capabilities [28][29]. - The rise of Direct-to-Consumer (DTC) business models can empower Chinese exporters to negotiate better pricing terms, allowing for greater use of RMB in pricing [34][35]. - Exploring RMB pricing mechanisms for key commodities where China has a competitive edge can also enhance its international pricing position [36]. Group 4: Reducing DCP and Becoming VCP - The restructuring of international trade and currency systems can weaken the dominance of the DCP, providing an opportunity for the RMB to increase its share as a VCP [45]. - The development of digital currencies and AI payment systems can lower transaction costs, making it easier for non-dominant currencies like the RMB to compete with the DCP [37][40]. - China's exploration of Central Bank Digital Currency (CBDC) and tokenized deposits can enhance the efficiency and security of RMB transactions, further supporting its international pricing power [42][43].