IDEAS home Printed from https://ideas.repec.org/a/bpj/buspol/v13y2011i3n6.html
   My bibliography  Save this article

U.S.-China Exchange Rate Negotiation: Stakeholders' Participation and Strategy Deployment

Author

Listed:
  • Cao Emily Yixuan

    (Duke University)

  • Cao Yong

    (University of Alaska Anchorage)

  • Prasad Rashmi

    (University of Alaska Anchorage)

  • Shen Zhengping

    (Xuzhou Normal University)

Abstract

Exchange rates influence a country's trading capability, foreign reserves and competitiveness. Recently, the exchange rate between the Chinese RMB and the U.S. dollar has been a contentious issue in both the United States and China. In this paper, we conduct a historical review of how the United States deployed negotiation strategies with China on the exchange rate issue and consider the degree to which it follows theoretical expectations. We then analyze the changing nature of the factors which shape exchange rate negotiations between the two nations in projecting alternative scenarios for the future of conflict resolution between the U.S. and China on this issue. We predict that the U.S. is likely to continue alternating between competition and collaboration, a negotiation cycle influenced by U.S. domestic politics, and China is less likely to continue with accommodation and compromise. The sequencing and timing of each nations negotiation strategy will lead to widely divergent consequences for the management of exchange rates and the world economy.

Suggested Citation

  • Cao Emily Yixuan & Cao Yong & Prasad Rashmi & Shen Zhengping, 2011. "U.S.-China Exchange Rate Negotiation: Stakeholders' Participation and Strategy Deployment," Business and Politics, De Gruyter, vol. 13(3), pages 1-25, October.
  • Handle: RePEc:bpj:buspol:v:13:y:2011:i:3:n:6
    as

    Download full text from publisher

    File URL: https://www.degruyter.com/view/j/bap.2011.13.issue-3/1469-3569.1368/1469-3569.1368.xml?format=INT
    Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.

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

    References listed on IDEAS

    as
    1. Kaplan, Stephen B., 2006. "The political obstacles to greater exchange rate flexibility in China," World Development, Elsevier, vol. 34(7), pages 1182-1200, July.
    2. Yi Gang, 2008. "Renminbi Exchange Rates and Relevant Institutional Factors," Cato Journal, Cato Journal, Cato Institute, vol. 28(2), pages 187-196, Winter.
    3. McKinnon Ronald I, 2006. "China's New Exchange Rate Policy: Will China Follow Japan into a Liquidity Trap?," The Economists' Voice, De Gruyter, vol. 3(5), pages 1-7, April.
    4. Hiscox, Michael J., 1999. "The Magic Bullet? The RTAA, Institutional Reform, and Trade Liberalization," International Organization, Cambridge University Press, vol. 53(04), pages 669-698, September.
    5. Bhagwati, Jagdish, 2008. "Termites in the Trading System: How Preferential Agreements Undermine Free Trade," OUP Catalogue, Oxford University Press, number 9780195331653.
    6. Ronald McKinnon, 2006. "China's Exchange Rate Trap: Japan Redux?," American Economic Review, American Economic Association, vol. 96(2), pages 427-431, May.
    7. Jaime Marquez & John Schindler, 2007. "Exchange-rate Effects on China's Trade," Review of International Economics, Wiley Blackwell, vol. 15(5), pages 837-853, November.
    8. Geng Xiao, 2008. "China's Exchange Rate and Monetary Policies: Structural and Institutional Constraints and Reform Options," Asian Economic Papers, MIT Press, vol. 7(3), pages 31-49, Fall.
    9. Imad A. Moosa, 2008. "Forecasting the Chinese Yuan-US Dollar Exchange Rate under the New Chinese Exchange Rate Regime," International Journal of Business and Economics, College of Business and College of Finance, Feng Chia University, Taichung, Taiwan, vol. 7(1), pages 23-35, April.
    10. Paresh Kumar Narayan, 2006. "Examining the relationship between trade balance and exchange rate: the case of China's trade with the USA," Applied Economics Letters, Taylor & Francis Journals, vol. 13(8), pages 507-510.
    11. Nicholas R. Lardy, 2005. "Exchange Rate and Monetary Policy in China," Cato Journal, Cato Journal, Cato Institute, vol. 25(1), pages 41-47, Winter.
    12. Wing Thye Woo, 2008. "Understanding the Sources of Friction in U.S.-China Trade Relations: The Exchange Rate Debate Diverts Attention from Optimum Adjustment," Asian Economic Papers, MIT Press, vol. 7(3), pages 61-95, Fall.
    13. M Bahmani-Oskooee & Y Wang, 2007. "The Impact of Exchange Rate Volatility on Commodity Trade between the U.S. and China," Economic Issues Journal Articles, Economic Issues, vol. 12(1), pages 31-52, March.
    14. Frieden, Jeffry A., 1991. "Invested interests: the politics of national economic policies in a world of global finance," International Organization, Cambridge University Press, vol. 45(04), pages 425-451, September.
    Full references (including those not matched with items on IDEAS)

    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:bpj:buspol:v:13:y:2011:i:3:n:6. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Peter Golla). General contact details of provider: https://www.degruyter.com .

    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.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.