About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline
LOG IN
LOG IN

1 1 (November 20, 2008)

handle is hein.crs/crsaihm0001 and id is 1 raw text is: Order Code RS21625 Updated November 20, 2008 China's Currency: A Summary of the Economic Issues Wayne M. Morrison Foreign Affairs, Defense, and Trade Division Marc Labonte Government and Finance Division Summary Many Members of Congress charge that China's policy of accumulating foreign reserves (especially U.S. dollars) to influence the value of its currency constitutes a form of currency manipulation intended to make its exports cheaper and imports into China more expensive than they would be under free market conditions. They further contend that this policy has caused a surge in the U.S. trade deficit with China and has been a major factor in the loss of U.S. manufacturing jobs. Although China made modest reforms to its currency policy in 2005, resulting in a modest appreciation of its currency many, Members contend the reforms have not gone far enough and have warned of potential legislative action. This report summarizes the main findings CRS Report RL32165, China's Currency: Economic Issues and Options for U.S. Trade Policy, by Wayne M. Morrison and Marc Labonte and will be updated as events warrant. From 1994 until 2005, China maintained a policy of pegging its currency, to the U.S. dollar at an exchange rate of roughly 8.28 yuan to the dollar.1 The Chinese central bank maintained this peg by buying (or selling) as many dollar-denominated assets in exchange for newly printed yuan as needed to eliminate excess demand (supply) for the yuan. As a result, the exchange rate between the yuan and the dollar basically stayed the same, despite changing economic factors which could have otherwise caused the yuan to either appreciate or depreciate relative to the dollar. Under a floating exchange rate system, the relative demand for the two countries' goods and assets would determine the exchange rate of the yuan to the dollar. Many economists contend that for the first several years of the peg, the fixed value was likely close to the market value. But in the past few years, economic conditions have changed such that the yuan would likely have appreciated if it had been floating. The sharp increase in China's foreign exchange 1 The official name of China's currency is the renminbi (RMB), which is denominated in yuan units. Both RMB and yuan are used to describe China's currency.

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Short-term subscription options include 24 hours, 48 hours, or 1 week to HeinOnline.

Purchase Access

Contact us for annual subscription options:

Contact Us

Already a HeinOnline Subscriber?

Log In

profiles profiles most