The Developed Patterns of China Renminbi Exchange Rate
The main purpose of the study is to investigate the exchange rate trend of China Renminbi from 1949 to nowadays, and predict the possibilities of the developed trend of China Renminbi in the future to investigate the problems of Chins Renminbi at present.
It can divide China Renminbi into three periods, there are Centrally Planned Economy Period (1949~1979), Export to Accumulate Foreign Reserve (1980~1993), and Economy Adjustment Period (1994 to nowadays). The rate standard of Renminbi is usually under the China Economy policy consideration. First of all, the China Renminbi of Centrally Planned Economy Period is based on the policy consideration of the heavy industrialization, and it tends to overvalue the rate exchange to decrease the import prime cost. This condition is similar to East Europe countries before Soviet Union dismissed. Second, the Export to Accumulate Foreign Reserve tends to decrease the export cost to solicit the business. And it tents to underestimate the rate exchange similar to Taiwan of 1970s and Japan after World War II, before Plaza Accord. Moreover, the Renminbi of Economy Adjustment Period overvalued the rate exchange, but it keeps stable. The overvalued and stable standard of rate exchange strengthens the export competition of China. At the same time, it accumulate great deal of Foreign reserve which similar to the development countries of Southeast Asian to adopt Fixed Exchange Rate Regime Pegged to US Dollar.
China accumulate great deal of foreign exchange because of the overvalued rate exchange, and it made the rate standard of Renminbi concerned by international. China can not self-contained after entering WTO, they have to face the opening market and the restriction of international regulations. China restricts itself by the textile industry, and they purchase foreign bond (American bond) to decrease the pressure of the appreciation of Renminbi. Even if the rate system of Renminbi has change from control the dollar to basket-pegged exchange rate regime, and it does not break away the connection between Hong Kong currencies. The Hong Kong currencies have risk of Hot Money. China still can not open their capital during the short term time to make the Renminbi floating and become convertible currency because of their economy circumstance; however, the expected long term rate of Renminbi revaluation is a necessary trend of the future.
Advisor:Hsien-chao Chang; Teh-chang Lin; Jiin-ming Fahn
School:National Sun Yat-Sen University
School Location:China - Taiwan
Source Type:Master's Thesis
Keywords:exchange rate regime renminbi
Date of Publication:02/08/2006