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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

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.

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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