China: A Nation Depreciating its Currency to Economic Prosperity
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Case Code: ECON033 Case Length: 14 Pages Period: 2000-2010 Pub Date: 2011 Teaching Note: Not Available |
Price: Rs.300 Organization : - Industry : - Countries : China Themes: Exchange Rate Management, Currency Valuation, Foreign Trade |
Abstract Case Intro 1 Excerpts
Excerpts
Background Note
China, a traditional, centrally planned economy with hardly any economic relations with the rest of the world, initiated economic reforms during the late 1970s...
The Yuan Undervaluation and Implications for China
From 1994 to early 2002, the nominal effective exchange rate (NEER) appreciated by around 40% due to appreciation of the US dollar...
Conclusion
Though China had its gains through the undervalued yuan, economists warned that growth led by undervaluing the yuan might not be beneficial all the time. China could face significant loss due to currency undervaluation, which however, might not affect it in the short term...
Exhibits
Exhibit I: Exports of China
Exhibit II: Current Account Balance of China
Exhibit III: Movement of Yuan
Exhibit III-a: Movement of Yuan against SDR and US Dollar
Exhibit III-b: Yuan per US Dollar
Exhibit IV: Inflation Rate in China
Exhibit V: China's Real Growth Rate
Exhibit VI: China's Trade with the World (UD$ billions)
Exhibit VII: Movement of NEER and REER
Exhibit VII-A: Movement of REER and NEER from January, 1994 to June 2010
Exhibit VIII: US Foreign Trade with China
Exhibit IX: China's Foreign Reserves
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