Handbook on the International Political Economy of China
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Handbook on the International Political Economy of China

Edited by Ka Zeng

This book examines the processes, evolution and consequences of China’s rapid integration into the global economy. Through analyses of Beijing’s international economic engagement in areas such as trade, investment, finance, sustainable development and global economic governance, it highlights the forces shaping China’s increasingly prominent role in the global economic arena. Chapters explore China’s behavior in global economic governance, the interests and motivations underlying China’s international economic initiatives and the influence of politics, including both domestic politics and foreign relations, on the country’s global economic footprint.
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Chapter 14: The domestic politics of China’s exchange rate policy

Alex (Xingqiang) He


This chapter examines China’s decision-making process over the exchange rate issue through a review of the evolution of Beijing’s exchange rate policy over the past 30 years. Case studies of three major reform episodes highlight the importance of domestic factors, in particular bureaucratic politics, interest groups, and top leaders’ preferences, in influencing China’s exchange rate policy. Bureaucratic politics represents the mainstream forces in China’s exchange rate policy. Interest groups played a decisive role in pushing the top leaders to make decisions in their favour at the proper time. The top leaders’ extreme risk aversion in crucial decision making determined the timing, scale, and significance of the final output of China’s exchange rate policy.

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