The US-China Exchange Rate Stand-Off
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Case Code: ECON019 Case Length: 18 Pages Period: 2002-2007 Pub Date: 2007 Teaching Note: Not Available |
Price: Rs.300 Organization : - Industry : - Countries : China and USA Themes: Corporate Social Responsibility |
Abstract Case Intro 1 Case Intro 2 Excerpts
Abstract
The Yuan-Dollar exchange rate has been a sore point in US-China trade relations in the early to mid-2000s, with the US government asserting that the Yuan is undervalued and that this provides an unfair advantage in trade to China. The issue has been discussed in numerous economic, foreign relations, and international trade studies. While some analysts criticize China for not letting the Yuan appreciate against the US Dollar, others consider the low US savings rate to be the root cause of the US trade deficit with China. The case discusses the issue and attempts to analyze the impact of China's currency policy on the economies of both countries.
Issues
The case is structured to achieve the following teaching objectives:
- To understand the dynamics of the exchange rate mechanism
- To understand the factors that can lead to distortions in trade between two countries
- To critically analyze China's exchange rate policy
- To analyze the factors behind the US trade deficit with China
Contents
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Introduction
Background Note
China Softens its Stand
Yuan's Revaluation: A Mirage?
The Other Point of View
Outlook
Exhibits
Keywords
Yuan-Dollar exchange rate, Undervalued currency and Chinese economy, US Trade Deficit, US-China trade relations, Effect of pegged Yuan on US economy, Misalignment of currencies, US treasury bills, International trade, US savings, China's Foreign exchange reserves
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