China’s Balance of Payments Analysis Report Essay

Over the past ten years China’s financial flows have fluctuated a fair bit, with down turns and upturns throughout. With an obvious trough when the GFC hit. Although as soon as the GFC finished China’s financial flows bounce straight back up and boomed. As of recent China’s financial flows have been in a deficit and is now looking to be bouncing back up into the positive numbers. (Refer to Figure C)

Many governments, especially in industrialized and developed nations, pay very close attention to foreign direct investment because the investment flows into and out of their economies can and does have a significant impact.

In 2013, America imported over 440,433.5 million dollars’ worth of goods from China but only exported 122,016.3 million dollars. (U.S. Census Bureau Foreign Trade) If America and other countries trade so frequently with China and rely so heavily on Chinese manufacturing, production, and innovation, then the aspect of currency manipulation within China and its potential negative effects on world trade is a very significant topic of importance and reason to research the subject. Our

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

The Foreign Direct Investment is stimulated by diverse macroeconomic factors such as the GDP, GDP per capita and also by the political stability of a country. The US is the country, which receives the more FDI in the world; even tough some other countries recently have increased their FDI considerably in term of growth. The overall quality of the infrastructure in the US

Other nations can also help with the aid of China’s New Year economy. The United States policies, through tax cuts and infrastructure spending, will help increase (proactive) fiscal stimulus and therefore benefit China in the long run. However, the financial situation is still at risk due to a sharp decline in China’s foreign exchange reserves. The stockpile decreased to $3.05 trillion which was a total loss of $69.1 billion. However, with a 6.7 percent growth over three-quarters, these problems seem to dwindle in concern.

In the guideline, any investments outside China on entertainments, and raising funds aboard with minor benefits to Chinese government are not allowed. (Foreign exchange limits of each person decreased to ten thousand dollars maximum annually.) As a result, Chinese investors are forced to contribute in the field of technology, science, energy etc rather than hotels, sports teams, films etc.

In this report ,as the people working in this company, will analyse the differences between home country market and target country market, and help to choose the suitable market when company have willing to investing in a foreign country, the decision of the country which the company can invest in is China. In this report, will make analysis for Chinese market

The Chinese Banking Regulatory Commission seeks to open three to five new banks throughout the year. Their focus is to be responsible for their own risk as a tactic to open their institution to domestic and foreign capital for investing (CBRC). In doing so, the CBRC will need to “reduce the threshold for foreign banks to enter the banking sector” and ease currency operation requirements to make investing more ‘user-friendly’ to foreigners (CBRC).

The government of china is very keen to encourage foreign investors, because foreign companies are regarded as relatively good corporate

Measuring the magnitude of exchange rate pass-through for Chinese exports is all the more relevant because China’s trade imbalance with richer trading partners, notably the United States, is often perceived as exacerbated by exchange rate manipulations. Many indeed argue that an appreciation of the renminbi would help rebalance China’s trade. While the RMB was pegged to the U.S. dollar until July 2005, Tang and Zhang (2014) noted that there were significant fluctuations in real terms from an appreciation of 9% from 2000 to 2001 to a depreciation of 17% from early 2005. The extent of its trade’s response to a change in the exchange rate however depends on the magnitude of the ERPT and on the price elasticity of Chinese exports and imports.

Excluding sale of government assets, total revenue is estimated to decline to around $2,246.6 million (27% of GDP), with overall net deficit increased to $636.7 million, equivalent to 7.7 percent of GDP. Moreover, assuming 60 percent of asset sales is realized in 2014, the overall net deficit should be around 5.4 percent of GDP.

For quite sometime the Yuan exchange rate has drawn massive criticism from developed countries, especially the US. This is because critics believe the Yuan is undervalued and therefore gives China’s exporters undue advantage. True to that, China has positioned itself as an export destination. Immediately in 1994 after it deliberately engaged in measures to undervalue its currency by adopting a pegged exchange rate regime, China transformed itself from trade deficit to trade surplus country. Even after dropping its fixed exchange rate regime in 2005, China has been accused severally of continuing to deliberately undervaluing its currency. However, an article reported on 16th November 2011 by Wall Street Journal indicated that the recent

Foreign direct investment has many forms. Broadly, foreign direct investment includes "mergers and acquisitions, building new facilities, reinvesting profits earned from overseas operations and intra-company loans".

In 1994 the Chinese government made the decision to peg the RMB to the US dollar at a rate of US$1 to RMB8.7, a year later the Renminbi appreciated 5% and was revalued to RMB8.28. This rate would remain unchanged for the next 10 years, even though the Chinese faced heavy scrutiny and pressure to revalue their currency. The Chinese exercised many policies in maintaining their exchange rate. The PBoC controlled the amount of foreign currency by forcing all exporters to immediately sell their foreign currency to designated banks. The RMB could only be traded on the China Foreign Exchange Rate