The International Monetary Fund ( Imf )

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

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.

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.

A country such as China might choose to peg their currency to the U.S. dollar to keep prices stable for a key trading partner like the U.S. If the U.S. dollar would appreciate considerably against most currencies, this would not affect China trade with the U.S., but Chinese goods would become more expensive to their other trading partners, and could cause Chinese exports to these other markets to decrease.

A country such as China might choose to peg their currency to the U.S. dollar to keep prices stable for a key trading partner like the U.S.  If the U.S. dollar would appreciate considerably against most currencies, this would not affect China trade with the U.S., but Chinese goods would become more expensive to their other trading partners, and could cause Chinese exports to these other markets to decrease.

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

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)

The Department of Treasury requires Congress to to deliver this report on worldwide monetary forms like clockwork. The report has sort of developed into an approach to weight different nations on their monetary standards. Timothy Geithner, the Treasury Secretary is taking the route of the two-track approach. As said, he 's not marking China as the controller of cash. Be that as it may, he likewise says the Treasury will consistently screen China 's cash/Yuan. Currently China has released the yuan 's peg to the dollar value. Be that as it may, the yuan has risen not exactly a percent against the dollar from that point forward. The yuan exchanges China, where it holds fast to the one percent band from the settled value each day. Be that as it may, it additionally exchanges outside of China, where the business sector does not need to hold fast to the one percent band (consider it like a seaward market for yuan). Given that throughout the previous halt, for a while the estimation of the yuan has been relentlessly pushed higher versus the dollar by the government of the Chinese, the Chinese created a convey exchange. Speculators can obtain dollars at zero percent, and after it levered-up and purchased yuan, for that it’s the most appreciated part. It 's not divergent from what we saw that was about to occur in the development of the markets. (www.marketplace.org)

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.

Secondly, the fixed dollar-pegged exchange rate system and monetary policy, the independence of the existence of a fundamental conflict, undermine the effectiveness of monetary policy cannot meet the needs of economic development. Monetary policy autonomy is essential for China’s macroeconomic stability; monetary policy should take precedence over the independence of significant exchange rate stability. But the Yuan against the U.S. dollar exchange

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

“If you owe your bank a hundred pounds, you have a problem; but if you owe it a million, it has.(1)”

The IMF was set up during the Second World War in the year 1944. It started operation in 1947 and it has been working with the UNO since. Its headquarters is in Washington D.C in America. IMF provides short term loans to countries having problems of balance of payments. It also provides technical advice to its members and ensures free flow of trade by removing all trade restrictions. It establishes and maintains stable exchange rate between member countries.