The macroeconomic impacts of Chinese currency appreciation on China and the rest of world : A global computable general equilibrium analysis
AbstractThere has been contentious debate surrounding the issue of undervaluation of the Chinese Renminbi. Despite continuous international political pressure to appreciate its currency, the Chinese government has resisted significant changes. A key question underlining the debate is whether a Renminbi appreciation would deliver substantial gains for exports and employment as the United States has argued or a significant slowdown of Chinese economy as feared by the Chinese government, and if so to what extent. This paper analyzes the ex-ante, short-term impacts of the Chinese Renminbi appreciation on the Chinese and world economies using the novel approach of modeling nominal exchange rate adjustment in the Global Trade Analysis Project, a global computable general equilibrium model. Scenario results show that the Chinese economy will be affected negatively, with lower real gross domestic product, lower employment rates, and a decline in the trade surplus. Chinese currency appreciation has a positive impact on the GDP of the major countries and regions, but by a small margin. With a higher Chinese exchange rate, trade balances for other trading partner countries, with the exception of the United States, improve.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by International Food Policy Research Institute (IFPRI) in its series IFPRI discussion papers with number 1178.
Date of creation: 2012
Date of revision:
Computable general equilibrium model; Exchange rate; Economic impacts; Renminbi appreciation;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-06-05 (All new papers)
- NEP-CMP-2012-06-05 (Computational Economics)
- NEP-MON-2012-06-05 (Monetary Economics)
- NEP-OPM-2012-06-05 (Open Economy Macroeconomics)
- NEP-TRA-2012-06-05 (Transition Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Funke, Michael & Rahn, Jörg, 2004.
"Just how undervalued is the Chinese renminbi?,"
BOFIT Discussion Papers
14/2004, Bank of Finland, Institute for Economies in Transition.
- Zhang, Jian & Fung, Hung-Gay, 2006. "Winners and losers: Assessing the impact of Chinese Yuan appreciation," Journal of Policy Modeling, Elsevier, vol. 28(9), pages 995-1009, December.
- van Tongeren, Frank W. & van Meijl, Hans, 2003.
"International Diffusion Of Gains From Biotechnology And The European Union'S Common Agricultural Policy,"
2003 Annual Meeting, August 16-22, 2003, Durban, South Africa
25835, International Association of Agricultural Economists.
- Meijl, Hans van & Tongeren, Frank van, 2004. "International diffusion of gains from biotechnology and the European Union's Common Agricultural Policy," Agricultural Economics, Blackwell, vol. 31(2-3), pages 307-316, December.
- Yin-wong Cheung & Menzie D. Chinn & Eiji Fujii, 2007.
"The Overvaluation of Renminbi Undervaluation,"
112007, Hong Kong Institute for Monetary Research.
- Yin-Wong Cheung & Menzie D. Chinn & Eiji Fujii, 2007. "The Overvaluation of Renminbi Undervaluation," CESifo Working Paper Series 1918, CESifo Group Munich.
- Yin-Wong Cheung & Menzie D. Chinn & Eiji Fujii, 2007. "The Overvaluation of Renminbi Undervaluation," NBER Working Papers 12850, National Bureau of Economic Research, Inc.
- William R. Cline & John Williamson, 2009. "2009 Estimates of Fundamental Equilibrium Exchange Rates," Policy Briefs PB09-10, Peterson Institute for International Economics.
- Marcus Noland & Sherman Robinson & Zhi Wang, 1999. "The Continuing Asian Financial Crisis: Global Adjustment and Trade," Working Paper Series WP99-4, Peterson Institute for International Economics.
- Ming He Goh & Yoonbai Kim, 2006. "Is The Chinese Renminbi Undervalued?," Contemporary Economic Policy, Western Economic Association International, vol. 24(1), pages 116-126, 01.
- Virginie Coudert & Cécile Couharde, 2005. "Real Equilibrium Exchange Rate in China," Working Papers 2005-01, CEPII research center.
- Bela Balassa, 1964. "The Purchasing-Power Parity Doctrine: A Reappraisal," Journal of Political Economy, University of Chicago Press, vol. 72, pages 584.
- van Tongeren, Frank W. & Huang, Jikun, 2004. "China'S Food Economy In The Early 21st Century; Development Of China'S Food Economy And Its Impact On Global Trade And On The Eu," Report Series 29093, Agricultural Economics Research Institute.
- Morris Goldstein & Nicholas Lardy, 2006. "China's Exchange Rate Policy Dilemma," American Economic Review, American Economic Association, vol. 96(2), pages 422-426, May.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.