Considering the Mixed re... ... middle of paper ... ...current trade deficit. Yes there will be benefits associated with increase global competitiveness of the US products. However, there are other factors not associated with Chinese currency affecting the US global trade competitiveness. A case in point is the fact that from 2005 to 2008 when China allowed it currency to appreciate by 21%, a 30.1% rise of US trade deficit with China was still experienced. In addition by further putting pressure on China to devalue its currency, US runs a major risk of losing on capital inflows coming particularly from Chinese investors.
Most US Senators feel that the revaluation move was too small and that China needs to allow the currency to increase in value, especially since 2.5% pales in comparison to the RMB’s predicted undervaluation of 30-40%. China is keeping its 0.3% percent daily trading band against the dollar, which means that even with this move there will not be a lot of volatility in the currency pair. China has many reasons to want to revalue their currency. The revaluation also makes imports cheaper for China. This comes at a critical time when commodity prices are rising.
Such a hegemon will serve to coordinate and discipline other countries so that each could feel secure opening its markets (cite). This opening of markets constitutes a collective good, because an individual can consume the good without paying for it. Moreover, it increases the income, growth and political power of the hegemonic st... ... middle of paper ... ...ng stagnant at low values. Their desire to see an appreciation in their purchasing power and the closing of income disparities between the rich and the poor may result in the Chinese government to begin looking inward to satisfy their populations needs and desires. In this case, dissatisfaction may emerge in the international system if China challenges the current world system.
As a result, the U.S. and Europe have imposed trade sanctions against China for the reason that China failed to allow its currency to modify properly with the market forces. When several countries make an effort to devalue their currencies at the same time, and benefit from it, the result may well be instability. Therefore, attempting to make gains through currency manipulation can result in an unstable global market economy. Consequently, investment and trade could be discouraged, which then limits growth. The emerging countries, such as China, are in a different growth stage and can afford a fixed increase in their currencies.
This need for the CCP to control China’s political system in turn has led to over-investment through the central government’s investment-driven growth, which would not occur had they not tampered with the natural dynamics of the market system. Thus, China’s political may be economically beneficial in the short run, but may not be in the long run. Further research can be done on the possible ways for China to smoothly transition into a market-oriented system.
This paper will examine the reality of the potential threats and the extent of the opportunities. What constitutes a threat and opportunity is entirely dependent on the perspective so, this paper will assume the perspective of the United States for the reasons of size and influence it has on the rest of the Western world. One of the biggest issues concerning the Western world with the rise of China is the economic effect on jobs. Many American companies are afraid of the job losses created by inexpensive Chinese imports. The theory is that China’s seemingly endless supply of cheap and lack of regulation allows them to produce goods at costs much lower than American firms causing a shift of employment to the East.
To do this they must have military power as well as economic power. China still wants to be the ‘middle-kingdom’ and the top leaders know this will take giving up short-run concessions in order to gain long-run supremacy. China will be hurt in the short-run by increasing its economic interdependence. The removal of certain tariffs and regulations will open up the Chinese market to outside competition. Government owned companies that were losing money will not survive with out drastic changes.
These hopes have largely been quelled by the illegality of a civil society. However, a co... ... middle of paper ... ... foreign relation, government, and economy. The trend is that leaders are listening to the public’s opinion and applying them to policy making. China might be prospering economically but it needs to make change to its political regime to resolve the growing tension within its civil society. By adopting democratic ideas they might be able to loosen up that tension.
China’s currency, the Yuan, has been appreciating over the past two decades compared to the numbers in 1993. China’s Yuan is set at a lower value in terms of the US dollar, since the US is one of their major trading partners and thus China needs to maintain its attractiveness for exports. China heavily relies on its exports, thus a change of its currency will result in significant consequences in terms of its economic performance, referring to a decrease in the rate of economic growth or even a fall in growth. In order for China to maintain economic growth, its exchange rate needs to be at a lower value in terms of the dollar. This paper assesses China’s current appreciation problem of its currency, the Yuan, and how it could result in serious economic problems in terms of trading on different stakeholders.
Although there has been booming trade between both countries, Chile increasingly feels the pressure of Chinese market competition and furthermore both countries have lost out in the advancement of foreign direct investment. With Chile’s chief exports comprising natural resources, China has a more lasting market power simply from the fact that their primary export industry is not perishable. This conjures the question of to what extent will the Chile-China free trade agreement be impacted in the future if Chile’s does not invest in new export market materials.