Foreign Exchange Rate of China
Description:
China has record a huge trade surplus for a couple of years. The U.S. insisted that a trade surplus be caused by the manipulation of foreign exchange rates by China government. China government changed its foreign exchange policy from fixed system to variable system. But actually the new system also almost fixed system.
Enablers:
If China accepts the U.S. demanding regarding foreign exchange policy,
-Execution of firm’s restricting
-Development of service industry
-Recognition of free trade country position
Inhibitors:
-Weak economic growth
-Decrease a trade surplus
-Increase unemployment
Paradigms:
China government can adjust its competitiveness using the foreign exchange rates. If China accepts the U.S. demanding, China loses the very powerful tool to control its economic. And also that means China close to the world economic condition.
Experts:
http://www.iie.com/publications/wp/wp04-1.pdf
Timing:
This is main issue between China and the U.S. during the APEC meeting.