The Appreciation of Rmb

The purpose of this research report is to provide an overview of China’s economic growth in relation to the long term economic growth drivers. Critical assessment will be made on the growth drivers to determine whether they lead to long term economic growth.

These effective strategies helped Hong Kong overcome the financial crisis. All these facts fully demonstrated that China is a responsible big country. After the Asia financial crisis, the importance of China's economy has been brought into focus; China's neighboring countries have begun to recognize the influence of the Renminbi.

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.

Inflation in China accelerated in november, as economic growth picked up and food prices rose. Chinese consumers paid 2% more for good and services in november then they did a year ago, the government's national bureau statistics reported on a Sunday. While that up from a 1.7% annual increase in october, it nevertheless represents tame inflation for the world's second largest economy. A year ago the country was experiencing an annual inflation rate at 4%. the Chinese government prefers to keep its annual inflation rate below 4%- a level it seems as consistent with health economic growth and consumer demand. The inflation rate averaged 4.23 percent reaching an all time high of 27.70 percent in october of 1994 and a record low of -2.20 percent in march of 1999. in china the most important components of the CPI basket are food at 31.8 percent of total weight and residence at 17.2 percent. Recreation, education and culture articles account for 13.8 percent; transportation and communication for 10 percent, healthcare and personal articles at 9.6 percent, clothing at 8.5 percent; household facilities, articles and services for 5.6 percent; tobacco liquor and articles for the remaining 3.5 percent. The CPI basket is reviewed every five years on the basis of household surveys. Revisions reflect new spending patterns and economic development, according to the nation bureau of statistics.

The change in the exchange rate policy to move to a more flexible floating exchange rate system will inevitably compromise China’s current advantageous position in trading especially the export which takes a heavy weight in China’s GDP. The appreciation of RMB will deprive the Chinese enterprises of the advantage to leverage the cheap materials and labor to compete in the international market. This might be a positive indication for China’s importers who has a focus on the domestic markets rather than the international market, where the importers’ purchasing power gets enhanced if the domestic currency appreciate. However, China is still heavily relying on export to grow their GDP at this point and a revaluation of RMB would be very dangerous for the country. Thousands of factories counting on exports might be closed and millions of workers would lose their jobs. As pointed out by Morgan Stanley Economist Andy Xie in the case, “China’s priority is stability and currency flexibility should not be allowed to conflict with this goal”. On the flip side though, a revaluation of the RMB would not necessarily change the current situation of US and EU who had a large trade deficit with China. The reduced imports from China are unlikely to stimulate the growth of the domestic productions of those

In our quickly expanding global economy, how states execute trade is more important than ever. Global organizations like the International Monetary Fund are established to help the states trade and regulate trade currencies. These global organizations are not always efficient, and can lead to imbalances in trade currency. “For more than a decade, the U.S. and other countries castigated China for its currency policy, saying the yuan’s level gave the country’s exporters an unfair advantage at the expense of its trading partners (Talley 1).” Since free trade always seems to result in trade deficits that are detrimental to the United States, the discussion should center on correcting the trade imbalance in an effort to have these free trade treaties fairer for all sides by imposing tariffs on 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

There is an engaging style and superb analysis on how China benefits from a more flexible currency regime resulting in the trade surplus to the US. The reforms in strengthening market and financial institutions in a prospering ‘socialist market economy’ exerts the beneficial impact.

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

Finally given the slowing economy in Asia the International Monetary Fund (IMF) has reclassified the yuan. Previously the IMF considered it to be “substantially undervalued” compared to other currencies. The IMF has softened its tone toward the Chinese yuan and it is now considered “moderately undervalued”. This new designation makes it harder for the United States government to make a case against and therefore policies to target the imports based on the Chinese yuan. (Davis, 2012)

Since the financial tsunami and the bankruptcy of Lehman’s Brother in September 2008, the world’s economy took a deep plunge and the Chinese economy is no exception. In the wake of the global financial crisis, The Economist (2008) reported that China’s real GDP growth slowed to 9 percent in the third quarter of 2008 and export growth slowed to 21.1%. It was, in fact, well below analyst expectations and recent

The appreciation of the RMB issue has attracted attention of various circles at home and abroad. By analyzing the current RMB exchange rate appreciation on China’s economic impact at all levels, I will mainly from the industrial structure, export structure, and enterprises to change their operational mechanism, to ease trade tensions and the effectiveness of monetary policy five-pronged approach to analysis; and my final conclusion: RMB exchange-rate appreciation generated by the final result is more positive than negative, impact is positive. In the current context of the appreciation has become a fact, china should actively take the appropriate follow-up measures to stabilize and optimize the economic environment, to minimize possible

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

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