China's Exchange Rate Policy: Options and Prescriptions (Policy Analyses in International Economics)

By Morris Goldstein

Over the past five years China has emerged as the world's largest global surplus economy; indeed by 2007-08 the size of its surplus relative to its GDP was of a magnitude unprecedented for a large trading economy. This development is especially surprising since in the first twenty-five years of economic reform China's trade and current account surpluses were quite small by East Asian standards, averaging less than 2 percent of GDP.

This study provides a comprehensive analysis of the key economic challenges facing the Chinese authorities in light of the still undervalued exchange rate, the large build-up of foreign exchange reserves, and more recently the sharp decline in economic growth. It analyzes the implications of China's exchange-rate policy for the effectiveness of monetary policy, the transition to a commercially oriented banking system, the evolving structure of output and demand, and the risk of protectionism abroad. The policy-options portion of the study takes account of the significant real effective appreciation of the renminbi over the past fifteen months and will contrast the pros and cons of a "stay-the-course" policy with that of a bolder, "three-stage" approach that would seek to maintain recent progress and to reduce even further the undervaluation of the renminbi.

• Format: Paperback
• Language: English
• ISBN: 0881324167
• ISBN13: 9780881324167
• Release Date: June 2008
• Publisher: Peterson Institute for International Economic
• Length: 124 Pages
• Weight: 0.45 lbs.
• Dimensions: 0.3" x 6.3" x 9.1"
• Grade Range: Postsecondary and higher