China 's Stature As A Political As Well As Economic Hegemon Essay

On July 21, 2005, China revalued its decade-long quasi-fixed exchange rate of approximately 8.28 yuan per U.S. dollar by 2.1% to 8.11. Simultaneously, the People’s Bank of China announced that the daily trading band of 0.3% against the dollar would be maintained. Many analysts and economists believed that the real trade-weighted value of the renminbi was undervalued by up to 30% to 35%.

For the last twenty eight years, China has been quickly growing into one of the largest economies in the world. China has accomplished this feat, in part, by radically changing their policies on trade and free market interactions with other countries. During this process, China has bought approximately one hundred trillion dollars of United States debt in the form of Treasury bills, notes, bonds, and Inflation Protected Securities (Amadeo). This debt has given China leverage against the United States which has enabled China to keep the value of the United States dollar high, while keeping the value of the Chinese yuan low. As the inflation of the dollar continues to negatively affect the

For more than sixty years the United States dollar has been the central reserve currency for the world. A reserve currency, also referred to as an anchor currency, is a currency that is held in significant quantities by governments and institutions as part of their foreign exchange reserves (Carbaugh, 2011). As the world’s reserve currency, the U.S. dollar is used throughout the world as a medium of exchange and is used as the global currency for products traded within the global market. In recent years the status of the U.S. dollar has been contested by a select few around the world. Leaders are unconvinced about the future of the United States economy as their deficits are exceeding record highs. The following analysis will discuss

In 2008, the Global Financial Crisis broke out; both the American economy and the economy in the West suffered a hard blow. However, a big economy system in the East emerged unexpectedly. China is now able to challenge the America’s decades-long dominant position in economic area. Started during the middle of 1990s, China’s manufacturing industry developed rapidly that billions of exports were floating out, and China was given the title of “the world’s factory”(BBC). By the end of 2010, China with a GDP of $5.8 trillion, surpassed Japan’s GDP of $5.48 trillion, became the world’s second largest economy system (BBC). China also exceeded Japan became America’s largest foreign securities holder. Since then, China has been seen as the US’s

Which goes back on how the dollar is back up. Another deal that countries see is that they can also exchange the Yuan which they have, to the federal banks of China into gold since their money is control in a gold standard economy.

The financial crisis of 2008 has been described as the worst financial crisis the world has seen since the great depression, but there are now murmurings of the potential for an even greater financial crisis, a currency crisis, caused by the demise of the US Dollar. The Dollar has been the reserve currency of the world since it took over from the Pound at the end of world war two, but we examine if it is about to crash spectacularly?

Throughout the 20th century, the United States has slowly constructed a global system of control. Its superior military, weaponry and intelligence apparatus have been crucial in this system, but an equally important factor has been its control of the global economy, and its primary weapon, the U.S. Dollar. The dollar’s world reserve status alone does not make it unique, but its deeply rooted role in American and global geo-politics certainly does. As Vassili Fouskas and Bülent Gökay point out in their book The New American Imperialism, “Dollar hegemony has always been strategic to the future of American global dominance, in many respects more important than America’s overwhelming military power. While military power is more visible and useful as a display, it is the dollar’s role as reserve currency that secures the domination of the U.S. in the global economic market place”. [1] This system is built on serious fault lines and its future is the most important issue for international relations today.

The United States is a powerful country with a powerful economy. It has a huge presence in the international market and this is due primarily to its exorbitant privilege. Exorbitant privilege is the benefit that the US is able to enjoy due to the dollar’s status as the currency used for international reserves. Many economists have criticized this privilege of the US, including Barry Eichengreen. Eichengreen presents the argument that the dollar should not be the only currency that is used in the International Monetary System (IMS) and that despite its history, it no longer has a reason to be the only currency in the global economy, believing that the IMS would benefit from having multiple international currencies. He argues this by presenting the history of the economies throughout the world that have led to this point. His presents his argument in his book Exorbitant Privilege: The Rise and Fall of the Dollar and the Future of the International Monetary System.

Australia has experienced an impressive economic boom in recent years on the back of selling natural resources, including coal and iron ore, to its Asian neighbours, and China accounts for more than a quarter of its exports. So weakness in the Chinese economy is bad news for Australia. Research by consultancy Oxford Economics last week, which modelled the impact of a 10% Chinese devaluation, accompanied by a sharp slowdown, suggested other hard-hit countries could include Brazil, Russia, Chile and Korea. If Beijing allows the yuan to decline further in coming months, it could increase trade tensions, or even a “currency war”, in which the world’s big trading blocs face off in a beggar-thy-neighbour battle to seize the largest possible share

Will the U.S. dollar remain the essential world money of decision, as University of Chicago scholastic and speculative stock investments administrator Christian Broda accepts? On the other hand is the U.S. dollar in peril of losing its status as the world store money of economic ruling to another form of the "almighty dollar" and with it the world's monetary pioneer could say adios to "exaggerated" fiscal benefits to pile on notable high government unpaid liability levels and take part in at no other time seen quantitative facilitating experimentation?

China, the largest growing market in the world, currently has a policy regarding monetary regulation that allows the Yuan to “float”. This has seen the Yuan appreciate by approximately 24% over the past few years. Today, the exchange rate between the Chinese Yuan and the American Dollar is approximately 6.3 Yuan to 1 Dollar. Some argue that China should revalue the Yuan again the dollar, establishing a more fixed exchange rate. Others believe that current should allow

In the 11 years, the international economic situation has undergone great changes; pegging the RMB exchange rate formation mechanism type has become increasingly unsuited to China 's economic reform and development requirements. It is demonstrated by the defects are:

The prevailing presumption amongst currency scholars of the past century is that issuing a currency that dominates global markets and trading is of overwhelming benefit, largely interpreted via the gains made by the US as the issuer of the dollar. These benefits have been both political and economic in nature, as discussed in the previous chapter. However, both domestic and external factors have begun to detract from the dollar’s pinnacle currency gains, and leads to questions of whether what was once described as an “exorbitant privilege” is deteriorating to the extent that it is a burden. While assessing the dollar’s evolved role as a ‘burden’ appears premature, nonetheless it appears the capacity of the US to use the dollar as a mechanism for power is under threat.

With China's deepening Opening Up and economic restructure adjustment and the continuous appreciation of RMB in recent years, the

The US and Europe felt that the RMB was undervalued for several reasons. One reason is that China’s exports had dramatically increased, growing 30% from 2004 to 2005, making China the third largest exporter in the world and accounting for