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China’s Yuan Exchange Rate Foreign countries have been pressing China’s government to alter its exchange rate policy to allow more flexibility, presumably so that the yuan will appreciate by a...

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China’s Yuan Exchange Rate

Foreign countries have been pressing China’s government to alter its exchange rate policy to allow more flexibility, presumably so that the yuan will appreciate by a substantial amount. What have been and are China’s policies toward the foreign exchange market? From the point of view of China’s government and the well-being of the Chinese economy and people, what are the main reasons for the Chinese government to allow more flexibility and (probably) substantial yuan appreciation? What are the main reasons for China’s government to maintain its current exchange rate policy? What do you think will actually happen in the next three to five years?

Data source: https://tradingeconomics.com/china/currency

Answered Same Day May 31, 2021 Curtin University of Technology

Solution

Alomita answered on Jun 01 2021
152 Votes
THE effect of the CHINEESE trade policy and it’s cu
ency appreciation on the world :
As a result of the forces of globalisation countries are, today, much more interdependent than they had been 20 to 30 years ago. Economic isolation is no longer a viable option for an economy that wishes to benefit from the global flow of goods, services and ideas. Aided by revolutionary changes in information and communication technology, this flow has undergone tremendous acceleration in recent years.
The exchange rate is the price of a country’s cu
ency in terms of that of another. Thus, it is a very important relative price that has important hearing on a country’s imports and exports. Over the years the world has faced difficulties in trade with China. This is mainly because the Chinese government have maintained a strict fixed exchange rate. A fixed exchange can be defined as that exchange regime which is fully...
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