| Author Info |
Additional information is available for the following registered author(s):
| Abstract |
Rapidly growing Chinese exports are middle-tech—and increasingly high-tech—manufactured goods. China runs a huge and growing bilateral trade surplus with the United States, and the position of Japan has changed radically from being a net exporter to China in the 1980s and most of 1990s to being a net importer today. China’s smaller East Asian industrial competitors such as Taiwan, Korea, and Singapore face fairly difficult readjustment problems. However, China is a huge importer of primary products and industrial raw materials and runs large import surpluses with the ASEAN group.
On the macroeconomic side, China has been a stabilizing influence. While maintaining steady high growth and exchange rate stability at 8.3 yuan per dollar since 1994, it has largely avoided, and thus dampened, the business cycles of its East Asian trading partners. But there are potential clouds on this horizon. Since 1995, China has run with moderate multilateral trade surpluses coupled with large inflows of foreign direct investment. The resulting balance of payments surpluses have led to a rapid buildup of liquid dollar claims on foreigners— both in official exchange reserves and, less obviously, in stocks held privately or in China’s nonstate sectors. This increasing private dollar overhang leads to what we call the syndrome of “conflicted virtue”. If there is no threat that the renminbi will appreciate, private portfolio equilibrium for accumulating and holding both dollar and renminbi assets can be sustained. However, foreigners, particularly Japanese, are upset with China’s “excessive” mercantile competitiveness. They are urging China’s government to appreciate the renminbi—and show greater future exchange rate flexibility, which could lead to repetitive appreciations. The result would be severe deflation throughout China’s economy and a zero-interest liquidity trap—as in Japan, when forced into repeated appreciations of the yen in the 1980s into the mid 1990s.
Working Papers Index
| Download Info |
If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. 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.
| Publisher Info |
Download reference. The following formats are available: HTML
(with abstract),
plain text
(with abstract),
BibTeX,
RIS (EndNote, RefMan, ProCite),
ReDIF
Contact details of provider:
Postal: Ralph Landau Economics Building, Stanford, CA 94305-6072
Phone: (650)-725-3266
Fax: (650)-725-5702
Email:
Web page: http://www-econ.stanford.edu/econ/workp/
More information through EDIRC
For technical questions regarding this item, or to correct its listing, contact: (Thomas Krichel).
| Related research |
Other versions of this item:
Cited by:
(explanations, 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.)
| Statistics |
Did you know? Data contributors to RePEc receive monthly emails with details about downloads and abstract views of their works.
This page was last updated on 2009-11-27.