Essays on Debate over the Chinese Exchange Rate Policy Statistics Project

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The paper “ Debate over the Chinese Exchange Rate Policy” is an informative example of the statistics project on finance & accounting. China is faulted for what experts term as currency exploitation that has led to losses of jobs in the U. S., Europe, and other countries in Asian, such as Japan; hence, endangering the global fiscal equilibrium. Some think that the revaluation of China's currency is a result of China giving in to this global pressure as well as realizing its liability in the world trade inequity. In this regard, the study seeks to discuss the debate over the Chinese exchange rate policy, focusing mainly on the implications of maintaining an ‘ undervalued’ exchange rate for the current account. The debate over the Chinese Exchange-Rate PolicyIntroductionIn 2005, the Central Bank of Chinese revalued its currency by 2.1% that is to say from 8.27 to 8.11 per US dollar, and this little revaluation was followed by an official amendment of the Chinese exchange rate policy (Hilland & Devadoss, 2013, p.

244). The Chinese authorities proclaimed that their currency was no longer bolted to the US dollar, and also that China was intending to modify the exchange rate policy by shifting into an administered floating exchange rate policy rooted in market demand as well as supply considering the currencies basket.

However, they never published information pertaining to the basket composition. According to Zhang and Sato (2012, p. 634), the revaluation took place during a powerful debate that had lasted for two years (2003 - 2005), in the midst of political leaders and scholars with regards to Chinese exchange rate policy. U.S. legislators have over and over again protested that the Chinese currency has been undervalued extensively, offering China an inequitable trade gain. Critical ReviewThe renminbi‘ s (RMB’ s) exchange rate turned out “ modifiable, with regards to market demand and supply, and based on basket’ s currencies exchange rate movements and that the U. S.

dollar exchange rate against the renminbi was changed from by an appreciation of 2.1% (from 8.28 to 8.11) (Li & Tsai, 2013, p. 103).

References

Hilland, A. & Devadoss, S., 2013. Implications of Yuan/dollar exchange rate for trade. Journal of International Trade Law & Policy, vol. 12, no. 3, pp. 243-257.

Li, S. & Tsai, L.-C., 2013. Would a Relaxation of the Exchange Rate Regime Increase the Independence of Chinese Monetary Policy? Evidence from China. Emerging Markets Finance and Trade, vol. 49, no. 3, pp. 103-123.

Lu, J. & Du, L., 2010. Credibility of Monetary Policy and Choice of Exchange Rate Regime: Based on the Analysis of New-Political Economy. (In Chinese. With English summary.). Jingji Yanjiu/Economic Research Journal, vol. 45, no. 8, pp. 16-28.

Zhang, Z. & Sato, K., 2012. Should Chinese Renminbi be Blamed for Its Trade Surplus? A Structural VAR Approach. The World Economy, vol. 35, no. 5, p. 632–650.

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