China's Currency Case: Export Driven Dependancy Essay

In conclusion, I think that China should change its policy because it is damaging not only the U.S. economy but the economy globally. Countries such as the United States are still recovering from the economic recession we are still leaving in. It is obvious that if China let the Yuan appreciate their exports will decrease and imports will increase making their trade surplus to decrease. If this happens international countries will be grateful because by this happening means that their export will increase and employment will increase. Countries should avoid doing currency manipulation or artificially devaluing their currency because it just hurts the global economy and it promotes other countries to do the same – it hurts everyone.

1. What are the implications of China’s exchange rate policy on doing business with and “against” China?

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

´´Currency manipulation is the cause of the U.S. trade deficit with China´´ (Geithner, 2009 p8, Morrison 2009, p3, Feenstra 2006, p29 ) is one of the most common claims that economists make when regarding the current trade relationship between U.S. and China. Although several economic policy reforms have contributed to the management of the RMB (Chinese currency), the statement ´´ the larger China’s external surplus is, the more undervalued is the Yuan´´ established by Zhe (2007 p11) seems to clarify that China´s currency is being manipulated by the government. This kind these strategies in order to enhance its competitiveness. This currency manipulation is becoming a difficulty for U.S and China´s

China, a country large in size, population, economy, is a really important asset globally. America’s second-largest trading partner, China is the producer of most of America’s items including clothes, consumer electronics, and manufacturing goods. The codependency of America and China is a very fragile and with recent debate of penalization, a potentially, volatile situation. It is the world’s second-largest economy after the United States, currently “accounting for about 12 percent of the world economy and about a quarter of global growth in recent years” (Swanson). China’s ability to produce large quantities of goods and at very low costs is what makes the country’s importance to global trade, especially America. 1.2 Trillion dollars of our debt is to China, which helps to keep our interest rates low by “allowing firms to make investments that would be unattractive at a higher cost of borrowing” (Kaneene). With investments like that, there is an increase in the capital available, an increase in the

However, China economy is beginning to slow down reaching a CDP growth of only 6.7%. The strong declines in manufacturing and construction output have been key drivers of China’s growth are now instrumental in the decline. These declines are impacting heavy industries, like steel cement and coal all of which are state-owned enterprises are clustered and of strategic importance t the central government (Eckart, 2016).

One of the major ways that China is affecting the world, and particularly the U.S., is the exchange rate. Devaluation, the official lowering of a country 's currency within a fixed exchange rate system, has boosted China 's exports in the past several years. It has also caused Chinese-made goods to be much less expensive, and U.S. imports, as well as imports from other countries, to become more expensive. Although China’s economy is benefitting from this change, other countries such as the U.S. have been greatly impacted.

China’s foreign reserves are on the increase as well since the year 2002. In 2007, it has the world’s greatest amount of foreign reserves amounting up to $1528 billion US dollars, exceeding the next largest holder, Japan. Official sources elaborate that US dollar holdings comprise of 60% of the reserves. This means that the US has a very large chunk of it reserves and therefore would not want China to declare itself bust any time soon. By 2050, it is also estimated that China will overtake the US and become the largest economy on the planet and will therefore be the largest superpower along with

The following paper coherently illustrates the trade patterns of USA and China and describes the various trade policies developed over the past years that have impacted the respective economies of both countries alongside the effect of the same on the bilateral trade relations between the two. Based upon the previous statistics, US-China trade is considerably one of the largest trading partners in today’s economies. Both countries’ trade relations entail exchange of investment, services as well as goods varying from agricultural products to non-agricultural products. Currently, China is the second-largest trading partner, third-largest export market and the biggest source of imports for the United States. The U.S. government’s debt purchased by China provides US the benefits of low interest rates (Morrison, 2015). While for few this economic relationship is considered to have a positive effect as it helps to fund the U.S. economy, for others it is an attributable concern that China may gain more power over the U.S (Loc.gov, 2016).

For the past twenty-five years, China has witnessed an overall increase in its domestic growth (Fischler 148). According to the article, “The Rise of China as a Global Power,” by Dr. Rosita Dellios, China “is the world's fourth largest trading nation, rising from 32nd in 1978 to 10th in 1997.” Similarly, China’s GDP is also second to the United States of America, generating 13 percent of the world’s output (Dellios). Since China’s introduction into the World Trade Organization in December 2001, its average tariff dropped from 41 percent in 1992 to 6 percent in 2001, becoming one of the most open economies in the world (Dellios). China is also the world’s fastest developing economy, obtaining an annual growth of 9.5 percent through foreign

Different from focusing on how to increase the growth rate in the long run, this study focuses on how to increase the output level in the short and medium run. In the National People’s Congress Press Conference in March of 2007, China’s Premier Wen Jiabao argues that the biggest problem with China’s economy is that the growth is unstable, unbalanced, uncoordinated, and unsustainable. Based on the fact that the current ratio of consumption over output in China is much smaller than that of other countries, such as Japan and the United States, a higher ratio will increase China’s real GDP level in the short run. Since the short run real GDP is larger than before, a higher ratio of consumption will increase China’s economic growth rate

Throughout the past decade, China has become a ‘Manufacturing Powerhouse’ (Eloot, 2013), low salaries plus a strong supply base, makes an equation for ideal platform for exports, which china defiantly benefited from. In 2011 China became the worlds largest producer of manufactured goods and still remains to be, ‘Factory Asia now makes almost half the world’s goods’ (The Economist, 2015). This has had a positive domino effect upon the wider economy in China, living standards have doubled and the countries GDP per captia has doubled in the last 10 years ‘an achievement that took the UK 150 years to do’ (Eloot, 2013) This

In recent years, China’s balance of payments always keeps “double favorable balance”. In 2005, China’s national economy developed quickly and stably. The exchange rat of RMB became more flexible. The current account surplus increased obviously and the capital account surplus decreased. The foreign exchange reserve still increased quickly. In 2005, Chinese government did some fiscal policy and monetary policy. Such as decreased government expense, raise the tax rate, used managed floating system, improve the foreign exchange management, enlarged the foreign exchange market. We can conclude that china’s BOP will still keep “double favorable balance” and keep

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