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The Renminbi and Poor-Country Growth

  • Christopher Garroway
  • Burcu Hacibedel
  • Helmut Reisen
  • Edouard Turkisch

Discussions on how best to exit from global imbalances to create a more balanced world economy have ignored the impact on poor countries of proposals to redress these imbalances. This paper aims at filling that gap. It gauges the degree of renminbi (RMB) undervaluation; presents evidence on RMB undervaluation and China’s GDP growth rate; surveys the role of the real effective exchange rate – both its level and its stability over time – for underpinning growth in developing countries, especially in large dual economies such as China and India; finally, the paper presents new evidence on growth linkages between China and poor countries for the last two decades and surveys literature on potential displacement effects of RMB appreciation. The analysis allows broad conclusions to be drawn about the potential developing-country beneficiaries and losers from various renminbi adjustment scenarios in the forthcoming years. Les discussions sur la meilleure façon de sortir des déséquilibres mondiaux afin de créer une économie mondiale plus équilibrée ont ignoré l'impact sur les pays pauvres des propositions visant à corriger ces déséquilibres. Le présent document vise à combler ce manque. Il évalue d’abord le degré de sous-évaluation du renminbi (RMB) ; il décrit ensuite les évolutions simultanées du degré de sous-évaluation du RMB et du taux de croissance du PIB chinois ; puis, il passe en revue le rôle du taux de change effectif réel - à la fois son niveau et sa stabilité au cours du temps – dans la croissance des pays en développement, surtout dans les grandes économies duales comme la Chine et l'Inde ; enfin, le document présente de nouvelles analyses sur les liens, au cours des deux dernières décennies, entre la croissance chinoise et celle des pays pauvres et passe en revue la littérature traitant des effets potentiels de l'appréciation du RMB sur la croissance. L'analyse permet d’identifier parmi les pays en développement, les bénéficiaires et perdants potentiels, en fonction de différents scénarios d'ajustement du renminbi dans les prochaines années.

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Paper provided by OECD Publishing in its series OECD Development Centre Working Papers with number 292.

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Date of creation: Sep 2010
Date of revision:
Handle: RePEc:oec:devaaa:292-en
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