The Impact of Regionalism and the Role of the G20
Edited by Jehoon Park, T. J. Pempel and Geng Xiao
Chapter 4: The Renminbi Debate: A Review of Issues and Search for Resolution
Yoonbai Kim and Gil Kim
Yoonbai Kim and Gil Kim 4.1 INTRODUCTION The value of China’s currency, the renminbi (RMB), has become a contentious issue. Many argue that the currency is undervalued and has been the main source for the country’s large current account surpluses especially with the United States (US). There has been mounting external pressure on China to allow the RMB to appreciate against the US dollar. A number of economists also argue that the exchange rate regime in China should change to market-based floating from heavy intervention in the foreign exchange market. In this chapter, we review some important issues related to the RMB. China has so far been resisting the pressure, permitting only gradual and small changes in its exchange rate policy. Apparently, the main concern for China seems to be that currency appreciation would have detrimental effects on its crucial export sector and create a host of economic problems, including worsening the unemployment problem in the rural sector and reducing economic growth. The Japanese experience of prolonged appreciation and decades-long recession has often been invoked as a reason for the resistance. The heated contention between the United States and China has pushed the world economy into a situation of competitive devaluations or ‘currency wars’ among many developed and emerging market economies. In this chapter, we briefly review two among the most contentious issues regarding the RMB. One is whether China should move to a float or at least an exchange rate regime with greater flexibility. The other is whether and...
You are not authenticated to view the full text of this chapter or article.
Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.
Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.
Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.