While at the same time, it will make imports in Hong Kong / China cheaper in relation to goods that are manufactured in both locations. Over the course of time, this will cause the trade surplus that Hong Kong / China enjoys decreasing as both markets begin to buy the cheaper foreign imports. ("The Impact of China's Revaluation of the Yuan," 2005) Yet, both Hong Kong and China are facing a similar situation as Japan, due to the fact that they rely heavily on foreign trade. Where, many of the different markets are somewhat open to exports, with restrictions. This is similar to a policy that Japan engaged in during the 1970's and 1980's, where once the peg was removed off of the U.S. dollar, the yen appreciated in value. Under normal circumstances, this should have solved Japan's trade surplus problems. However, because their markets were still restrictive to foreign imports, meant that the country would begin to see their trade surpluses become smaller. This would cause the Bank of Japan to engage in an easy monetary policy, in an effort to continue to encourage large amounts of investing. At which point, this would fuel a bubble in the real estate and the stock markets. Once this took place,...
This is because the central government attempted to maintain the affects of having the currency pegged to the U.S. dollar. A similar situation could occur in Hong Kong, where once the currency is allowed to float freely. The central government will more than likely attempt to maintain the positive benefits that it enjoyed for so long. The problem with engaging in such a policy is: that you are artificially trying to regulate the forces of supply and demand. If actions, such as a predetermined rate are left in place to long, this pent up demand will increase the value of the Hong Kong dollar dramatically (once it is allowed to float freely). This will cause the trade surplus to decline as many expensive imports are now affordable, while the total number of exports will become more expensive on foreign markets. (Fung, 2007)
China's currency policy may make that country the main country with whom the U.S. has a current account deficit, but if not for China the U.S. would have the same problems, just with another country for the protectionists to scapegoat. 3) I think an aggressive legislative posture is the best approach to take with regards to China's currency position. Ultimately, China is an economic actor the same as any other.
Foreign Policy of China (Beijing consensus) Structure of Chinese Foreign Policy The "Chinese Model" of Investment The "Beijing Consensus" as a Competing Framework Operational Views The U.S.-China (Beijing consensus) Trade Agreement and Beijing Consensus Trading with the Enemy Act Export Control Act. Mutual Defense Assistance Control Act Category B Category C The 1974 Trade Act. The Operational Consequences of Chinese Foreign Policy The World Views and China (Beijing consensus) Expatriates The Managerial Practices Self Sufficiency of China (Beijing consensus) China and western world: A comparison The China (Beijing
RMB The Chinese currency was selected as the focus of this study for several reasons. The primary reason behind this selection is the rising importance of the Chinese currency's valuation compared to other major world currencies. This is because of China's already large and still-growing trade presence in all global markets and the artificial nature of its currency's valuation, as the government manipulates the exchange rate for the Renminbi by tying
Markets USD/CNY Currency Exchange Relationship The amount of money passing through a foreign exchange market was pegged at $4.0 trillion per day in April 2010 (Bank for International Settlements, 2010). Among the many currencies traded on the open market, the U.S. dollar (USD) continued to lead the pack by a wide margin; a full 84.9% of all trades involved the USD. By comparison, the Chinese currency (CNY) increased its share of
Foreign Exchange Market of China The foreign exchange market is a financial market for trading currencies. The market is decentralized and there are financial centers around the world that operate as places of trade, where different types of buyers and sellers can trade the currencies. Ultimately, these trades directly influence how each currency is valued relative to the world market. The foreign exchange market involves international trade and investment which in
Other credit card issuers are proceeding more cautiously. MBNA, for example, the second-biggest card lender in the United States, after Citibank, said in April that it had set up an office in Shanghai to study the market (Kingson, 2004)." Many credit card providers are waiting until the restrictions are lifted in China before determining whether or not to open. It is important to study the impact that the lifting of
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