Undervalued Currency:
China
Undervalued Currency:
ChinaA look at the dynamics of the Chinese
Renminbi.A look at the dynamics of the Chinese
Renminbi.
By: Adam Starr and Ryan Cortez
OverviewOverviewIs the Renminbi undervalued?
What does this do for China?
What does this mean for the World?
Why should China appreciate the Renminbi?
How do we know the Renminbi is
undervalued?
How do we know the Renminbi is
undervalued?
The Big Mac Index: China BM = $1.83U.S. BM = $3.58
Purchasing of Foreign AssetsCapital Acct + Current Acct = 0
What does this do for China?
What does this do for China?
Maintains high demand for domestic production
Keeps jobs in exporting sectors
Labor income is lower than it could be
What does this mean for the world?
What does this mean for the world?
Cheaper imports
Less competition internationally
Less consumption for non-Chinese goods
Why appreciate the Renminbi?
Why appreciate the Renminbi?
Increase the value of wages in China
To prevent trade sanctions from the US and EU
Allow more competition for other developing countries exports