China's Exchange Rate Policy: Options and Prescriptions

China's Exchange Rate Policy: Options and Prescriptions

by Morris Goldstein, Nicholas R. Lardy
     
 

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Over the past five years China has emerged as the world's largest global surplus economy; indeed by 2007-08 the size of its surplus relative to its GDP was of a magnitude unprecedented for a large trading economy. This development is especially surprising because in the first twenty-five years of economic reform, China's trade and current account surpluses were very…  See more details below

Overview

Over the past five years China has emerged as the world's largest global surplus economy; indeed by 2007-08 the size of its surplus relative to its GDP was of a magnitude unprecedented for a large trading economy. This development is especially surprising because in the first twenty-five years of economic reform, China's trade and current account surpluses were very small by East Asian standards. This study provides a comprehensive analysis of the key economic challenges facing the Chinese authorities in light of the still undervalued exchange rate, the large build-up of foreign exchange reserves, and more recently, the sharp decline in economic growth. It analyzes the implications of China's exchange-rate policy for the effectiveness of monetary policy, the transition to a commercially oriented banking system, the evolving structure of output and demand, and the risk of protectionism abroad. The policy-options portion of the study takes account of the significant real effective appreciation of the RMB over the past fifteen months and will contrast the pros and cons of a "stay-the-course" policy with that of a bolder, "three-stage" approach that would seek to maintain recent progress and to reduce even further the undervaluation of the RMB.

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Product Details

ISBN-13:
9780881324167
Publisher:
Peterson Institute for International Economics
Publication date:
06/01/2008
Pages:
112
Product dimensions:
5.90(w) x 8.90(h) x 0.30(d)
Age Range:
3 Months

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