The Chinese currency, the Renminbi, is a subject of controversy between China and its trading partners (particularly the USA), the blame China manipulating its exchange rate to its exports artificially cheaper. You feel the renminbi as an unfair weapon in international competition. Chinese officials said that these attacks were unfounded: the renminbi was not undervalued, at least not significantly. The pin to obtain a stable economic environment, the … Read more »

The Chinese currency, the Renminbi, is a subject of controversy between China and its trading partners (particularly the USA), the blame China manipulating its exchange rate to its exports artificially cheaper. You feel the renminbi as an unfair weapon in international competition. Chinese officials said that these attacks were unfounded: the renminbi was not undervalued, at least not significantly. The pin to obtain a stable economic environment that benefits all economic partners. She also said that if the U.S. ran a large trade and budget deficits, it was partly due to capital inflow from China. The U.S. should focus on the weaknesses of the economy that generates these deficits, but to treat China as a scapegoat. Officials also said that China was a sovereign state with the right to choose its exchange rate policy. During 2005-2007, the debate was regularly in the news, and it was likely that arguments would become harder when American and European trade deficit with China continues to increase. This case is about economics and business administration, introducing the basics of monetary economics and show practical applications of monetary policy and exchange rates relating to business decisions ..
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from
Ka-Fu Wong,
K.C. Fung,
Ricky Lai
Source: University of Hong Kong
22 pages.
Release Date: 24, January 2008. Prod #: HKU710-PDF-ENG
China’s yuan: “Our currency, your problem”? HBR case solution

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