The Currency of the Peopleâ€™s Republic of China and Production Fragmentation
AbstractThis paper examines how an appreciation of the currency of the Peopleâ€™s Republic of China (PRC)â€”renminbiâ€”affects the countryâ€™s exports in the context of production fragmentation, using a panel data set of the PRCâ€™s trade for 1992/93â€“2008/09. It constructs two exchange rates for renminbi : one is a bilateral real exchange rate and the other is a real effective exchange rate against East Asian component suppliers. It is found that appreciation of the renminbi would somewhat offset a reduction in the volume of the PRCâ€™s exports induced by lower importing costs of components. Hence, evidence casts further doubts on the efficacy of further unilateral reform of the renminbi exchange rate regime on correcting trade imbalances.
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Bibliographic InfoPaper provided by East Asian Bureau of Economic Research in its series Macroeconomics Working Papers with number 23209.
Date of creation: Nov 2011
Date of revision:
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exchange rate; renminbi; production fragmentation; the PRC;
Other versions of this item:
- Nobuaki Yamashita, 2011. "The Currency of the Peopleâ€™s Republic of China and Production Fragmentation," Trade Working Papers 23209, East Asian Bureau of Economic Research.
- F14 - International Economics - - Trade - - - Empirical Studies of Trade
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
- F31 - International Economics - - International Finance - - - Foreign Exchange
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- Athukorala, Prema-chandra & Yamashita, Nobuaki, 2006.
"Production fragmentation and trade integration: East Asia in a global context,"
The North American Journal of Economics and Finance,
Elsevier, vol. 17(3), pages 233-256, December.
- Prema-chandra Athukorala & Nobuaki Yamashita, 2005. "Production Fragmentation and Trade Integration: East Asia in a Global Context," Departmental Working Papers 2005-07, The Australian National University, Arndt-Corden Department of Economics.
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