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A (Lack of) Progress Report on China's Exchange Rate Policies

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  • Morris Goldstein

    ()
    (Peterson Institute for International Economics)

Abstract

This working paper assesses the progress made in improving China’s exchange rate policies over the past five years (that is, since 2002). I first discuss four indicators of progress on China’s external imbalance and its exchange rate policies—namely, the change in (and level of) China’s global current account position, movements in the real effective exchange rate of the renminbi (RMB), the role of market forces in the determination of the RMB, and China’s compliance with its obligations on exchange rate policy as a member of the International Monetary Fund (IMF). I then discuss why the lack of progress in improving China’s exchange rate policies matters for the economies of the China and the United States and for the international monetary and trading system. I also argue that several popular arguments and excuses for why more cannot be accomplished on removing the large undervaluation of the RMB are unpersuasive. Finally, I consider what can and should be done by China, the United States, and the IMF to accelerate progress over the next year or two.

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Bibliographic Info

Paper provided by Peterson Institute for International Economics in its series Working Paper Series with number WP07-5.

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Date of creation: Jun 2007
Date of revision:
Handle: RePEc:iie:wpaper:wp07-5

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Keywords: exchange rate; current account adjustment; China; IMF;

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Cited by:
  1. Das, Dilip K., 2009. "The evolution of renminbi yuan and the protracted debate on its undervaluation: An integrated review," Journal of Asian Economics, Elsevier, vol. 20(5), pages 570-579, September.
  2. Mishkin, Frederic S., 2009. "Globalization and financial development," Journal of Development Economics, Elsevier, vol. 89(2), pages 164-169, July.

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