IDEAS home Printed from https://ideas.repec.org/a/taf/rcejxx/v11y2018i3p284-300.html
   My bibliography  Save this article

The Long-Drawn Process of reform of the Exchange Rate Regime and the Evolution of China’s Exchange Rate Policy

Author

Listed:
  • Yu Yongding

Abstract

An inflexible exchange rate not only brings the traditional problem of impossible trinity but also contributes to the formation of China’s irrational international balance of payments structure characterized by the so-called twin surpluses (current account and capital account surpluses). As a result, though China has some 2 trillion USD net foreign assets, it runs investment income deficits for more than a decade. Furthermore, when the RMB is under appreciation pressure, the inflexibility brings about inflows of hot money. When the RMB is under depreciation pressure, the inflexibility facilitates the unwinding of carry trade and capital flights. On the whole, China is too cautious in reforming its exchange rate regime. Instead of designing various cumbersome central parity rate-setting rules, China should make up its mind to float the RMB as soon as possible.

Suggested Citation

  • Yu Yongding, 2018. "The Long-Drawn Process of reform of the Exchange Rate Regime and the Evolution of China’s Exchange Rate Policy," China Economic Journal, Taylor & Francis Journals, vol. 11(3), pages 284-300, September.
    • Handle: RePEc:taf:rcejxx:v:11:y:2018:i:3:p:284-300
    DOI: 10.1080/17538963.2018.1512542
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/17538963.2018.1512542
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/17538963.2018.1512542?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:rcejxx:v:11:y:2018:i:3:p:284-300. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/rcej .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.