The US-China Exchange Rate Stand-Off

            
 
Economics Case Studies | Economics Case Study

ICMR HOME | Case Studies Collection

Case Details:

Case Code : ECON019
Case Length : 18 Pages
Period : 2002-2007
Pub Date : 2007
Teaching Note :Not Available
Organization : -
Industry : -
Countries : China and USA

To download The US-China Exchange Rate Stand-Off  case study (Case Code: ECON019) click on the button below, and select the case from the list of available cases:

Economics Case Studies | Case Study in Management, Operations, Strategies, Business Ethics, Case Studies

Price:

For delivery in electronic format: Rs. 300;
For delivery through courier (within India): Rs. 300 + Shipping & Handling Charges extra

Themes

Corporate Social Responsibility

» Economics Case Studies
» Short Cases Studies
» View Detailed Pricing Info
» How To Order This Case 

Custom Search


Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.



Chat with us

Strategic Management Formulation, Implementation, & Control, 12e

Please leave your feedback

Leave Your Feedback

ICMR India ICMR India ICMR India ICMR India RSS Feed

<< Previous

Introduction Contd...

Criticism of China's currency policy grew after China's accession into the WTO, which allowed China's share of world exports to grow from 4.4% in 2001 to more than 8% (2006), with a significant portion of these exports reaching US shores. Post-WTO, the US government had been using several means - including the threat of trade sanctions - to pressurize China to revalue its currency against the US Dollar. The Chinese government, on the other hand, maintained that the exchange rate of the Yuan against the US Dollar was not fixed. However, some Chinese officials agreed that their government did intervene to maintain the exchange rate within a narrow band. But they added that a stable Yuan-Dollar exchange rate was necessary as it promoted economic and financial stability in China.

Economics | Case Study in Management, Operations, Strategies, Business Strategy, Case Studies

 While US government and trade representatives were critical of China's alleged pegging of the currency, economists were of the view that undervaluation of the Yuan against the Dollar brought some benefits to the US economy as well. The low prices of imported Chinese goods lowered the costs for US firms that used these cheap Chinese imports as inputs in their production. Also, the cheap Chinese imports helped keep inflation down in the US. 

Background Note

The international monetary system, as we know it, has been in existence since the 19th century. Prior to 1870, countries adopted different monetary systems such as bimetallism, gold, silver, and inconvertible fiat currencies. After 1870,11 many countries adopted gold convertibility.12 Gold was chosen because of its international recognition and its characteristics such as divisibility into standardized units (ounces) and storability. Most importantly, gold was thought to contribute to economic stability. Under the gold standard, each currency was defined in terms of its gold value. The US Dollar, which was unconvertible earlier, became gold convertible in 1879...

Excerpts >>


Custom Search




Case Studies on Generic Strategies - Vol. I
 

Economics for Managers Textbook
Textbooks Collection

Economics for Managers Workbook
ICMR books Collection

Case Studies on Generic Strategies - Vol. I

Case Studies on Generic Strategies
e-Book on Generic Strategies

Case Study Volumes Collection

11] This happened after delegates (from 20 European countries and the USA) to the International Monetary Conference, held at Paris in 1867, decided to adopt a monometallic uniform monetary system.

12]  The free convertibility of a currency exclusively into gold.

13]  1 troy ounce was equal to 480 grains of pure gold.

 

Case Studies Links:- Case Studies, Short Case Studies, Simplified Case Studies.

Other Case Studies:- Multimedia Case Studies, Cases in Other Languages.

Business Reports Link:- Business Reports.

Books:- Textbooks, Work Books, Case Study Volumes.